Question

Five months ago, a customer signed a $123,500, 5-month, 8% promissory note. On maturity, the customer must pay the amount borrowed plus accrued interest. After two months, accrued interest would be calculated as follows:

1. Determine the annual interest rate based on the 8% stated annual rate: (8% / 12) x 2 months = 1.33%.
2. Calculate the interest on the principal amount for two months: $123,500 x (1.33% / 100) x 2 = $2,622.10.

Answer 1

The Mathematics question pertains to simple interest calculations for high school students. For a $5,000 loan at 6% interest for three years, the total interest is $900. If $500 in interest is earned on a $10,000 five-year loan, the interest rate charged is 1%.

Step-by-step explanation:

The subject of this question is Mathematics, specifically dealing with the topic of simple interest calculations. The grade level is likely High School, as the calculations involved are generally taught at this level. We have two distinct questions:

• Question 6: What is the total amount of interest from a $5,000 loan after three years with a simple interest rate of 6%?
• Question 7: If you receive $500 in simple interest on a loan that you made for $10,000 for five years, what was the interest rate you charged?

To answer Question 6, we use the formula for simple interest: Interest = Principal × rate × time. The total amount of interest can be calculated as:

Interest = $5,000 × 0.06 × 3 = $900.

For Question 7, we rearrange the simple interest formula to solve for the rate:

Rate = $500 / ($10,000 × 5) = $500 / $50,000 = 0.01 or 1%.

Thus, the interest rate charged on the loan would be 1%.