Question

A company borrowed $16,000 by signing a 180-day promissory note at 12%. The total interest due on the maturity date is. (Use 360 days a year.) Multiple Choice A. $80.00 B. $480.00 C. $960.00 D. $1,440.00 E. $1,920.0

Answer 1

The total interest due on a 180-day promissory note for $16,000 at an annual interest rate of 12% is $960.00, calculated using the simple interest formula based on a 360-day year.

Step-by-step explanation:

The question asks us to calculate the total interest due on a promissory note with a principal of $16,000, a term of 180 days, and an annual interest rate of 12%, using a 360-day year to calculate daily interest. The formula for simple interest is Interest = Principal × Rate × Time, where Time is in years.

To find the total interest due, you can use the following steps:

1. Convert the annual interest rate to a daily rate by dividing by 360 (12% ÷ 360).
2. Multiply the daily interest rate by the number of days the note is in effect (180 days).
3. Multiply this daily interest by the principal amount ($16,000).

When you perform these calculations, the interest comes out to $960.00.

Therefore, the correct answer is C. $960.00.