Asked by Tajmia Muhammad on May 08, 2024
Verified
A company borrowed $16,000 by signing a 4-month promissory note at 12%.The amount of interest to be paid at maturity is $640.
Promissory Note
A financial instrument where one party (the issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.
Maturity
The date on which a financial obligation, such as a bond or loan, is due to be fully repaid.
- Understand the techniques for computing and documenting interest on notes receivable.
Verified Answer
EN
esther nkansahMay 14, 2024
Final Answer :
True
Explanation :
To calculate the interest, we can use the formula:
Interest = (Principal x Rate x Time)
Here, the principal is $16,000, the rate is 12% per annum, and the time is 4 months or 4/12 years.
Therefore, Interest = (16000 x 0.12 x 4/12) = $640
Hence, the answer is true.
Interest = (Principal x Rate x Time)
Here, the principal is $16,000, the rate is 12% per annum, and the time is 4 months or 4/12 years.
Therefore, Interest = (16000 x 0.12 x 4/12) = $640
Hence, the answer is true.
Learning Objectives
- Understand the techniques for computing and documenting interest on notes receivable.