Question

If a $20,000, 9-month note payable was issued at 8%, then what will the interest payment be at maturity?

A. $1,700
B. $1,200
C. $1,800
D. $1,600

Answer 1

The interest payment at maturity for a $20,000, 9-month note payable issued at 8% will be $1,200.

Step-by-step explanation:

To calculate the interest payment on a note payable, we can use the formula:

Interest Payment = Principal x Interest Rate x Time

Given that the principal (P) is $20,000, the interest rate (R) is 8% (0.08), and the time (T) is 9 months (0.75 years), we can plug in these values into the formula:

Interest Payment = $20,000 x 0.08 x 0.75 = $1,200

Therefore, the interest payment at maturity will be $1,200, which means the correct answer is B. $1,200.