Kate gives a 79-day, 10 percent note, to Windsor Company in the amount of $10,000. Which of the following is the interest to be paid on the note at maturity? Assume a 360-day year. (Round your answer to the nearest dollar.)
A) $1,033
B) $219
C) $4,557
D) $797

Question

Kate gives a 79-day, 10 percent note, to Windsor Company in the amount of $10,000. Which of the following is the interest to be paid on the note at maturity? Assume a 360-day year. (Round your answer to the nearest dollar.)
A) $1,033
B) $219
C) $4,557
D) $797
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Quizplus · Accepted Answer

The interest on the note can be calculated using the formula: Interest = Principal × Rate × Time. Here, Principal = $10,000, Rate = 10% (or 0.10), and Time = 79/360 years (since a 360-day year is assumed). Thus, Interest = $10,000 × 0.10 × (79/360) = $219.44, which rounds to $219.

Kate Gives a 79-Day, 10 Percent Note, to Windsor Company