A company borrowed $6,000 by signing a 4-month promissory note at 12%. The total interest on the note is $720.
$6,000 x 0.12 x 4/12 = $240

Question

Quizplus · Accepted Answer

The calculation provided is incorrect. The formula for simple interest is Principal x Rate x Time.

For this problem, the principal is $6,000, the rate is 12%, and the time is 4/12 (since it is a 4-month note).

$6,000 x 0.12 x 4/12 = $240 in total interest.

Therefore, the answer is B - False.

A Company Borrowed $6,000 by Signing a 4-Month Promissory Note