A business accepts a 9 percent,$50,000 note due in 120 days.Assuming simple interest,how much (amount rounded)will the business receive when the note falls due?
A)$50,000
B)$50,150
C)$51,480
D)$54,520

Question

Quizplus · Accepted Answer

Simple interest is calculated by multiplying the principal amount, interest rate, and time. 
In this case, the principal amount is $50,000, the interest rate is 9%, and the time is 120/365 years (assuming a 365-day year). 
Simple interest = $50,000 x 0.09 x (120/365) 
Simple interest = $1,480 
When the note falls due, the business will receive the principal ($50,000) plus the simple interest ($1,480), which equals $51,480. Therefore, the best choice is C.

A Business Accepts a 9 Percent,$50,000 Note Due in 120