Question

An interest-bearing note receivable dated April 14 matures on July 23. The principal amount is $10,000, the annual interest rate is 10 percent, and the total interest income for the note is _____________. (Assume that a year has 360 days for the purpose of calculating interest.)

Answer 1

The total interest income for the note is $277.78.

Step-by-step explanation:

To calculate the total interest income for an interest-bearing note receivable, we need to determine the interest earned over the period from April 14 to July 23. We can use the formula:

Interest = Principal × Rate × Time

First, we calculate the time in terms of the number of days between April 14 and July 23, which is 100 days (assuming a year has 360 days). Next, we substitute the values into the formula:

Interest = $10,000 × 0.10 × 100/360 = $277.78

Therefore, the total interest income for the note is $277.78.