26 The total interest that would be due and payable based on

26. The total interest that would be due and payable based on an $80,000 note payable at an annualized interest rate of 6%, for a period of 90-days (assuming a 360 day year) would be: ) $2,400 B) $1,200 C) $4,800 D) None of the above

Solution

Prinicipal Amount = $80,000

Interest rate = 6% per annum

Interest has to be calculated for 90 days assuming the year of 360 days

Interest = Principal*Interest rate*No. of Days/Days in a year

Hence, Interest Amount = 80,000*6%*90/360

= 80,000*6/100*90/360

=$1200

i.e. B