A company borrowed $1,000 by signing a six month promissory note at 5% interest. The total amount of interest is $25.
$1,000 x .05 x 6/12 = $25

Question

Quizplus · Accepted Answer

The formula to calculate simple interest is Principal x Rate x Time. In this case, the principal is $1,000, the rate is 5% and the time is 6/12 (as the note is for six months). Plugging the values into the formula gives $1,000 x .05 x 6/12 = $25, confirming that the total amount of interest is indeed $25.

A Company Borrowed $1,000 by Signing a Six Month Promissory