Question

On August 1, 2021, a company accepts an $8,000, 9-month note receivable. For 2021, the company reports interest revenue of $200. What is the interest rate on the note?

Answer 1

Answer:

6%

Step-by-step explanation:

We have to calculate the interest rate in the note, we must follow the following steps, calculate the amount of time remaining from the year 2021, as follows:

interest is for 5 months i.e. from Aug 01 to Dec 31 for year 2021 , so it means it would be 5/12 months.

We have to calculate the interest as follows:

I = P * R * T

We replace:

200 = 8000 * R * 5/12

we solve for R

200 * 12/5 = 8000 * R

R * 8000 = 480

R = 480/8000

R = 0.06

Which means that the interest rate on the note is 6%