Question

On August 2, Jun Company receives a $7,400, 90-day, 13.5% note from customer Ryan Albany as payment on his $7,400 account receivable. What is the interest on the note after 90 days?

1) $1,000
2) $1,005
3) $1,010
4) $1,015

Answer 1

The interest on a $7,400, 90-day, 13.5% note after 90 days is calculated using the simple interest formula and it amounts to $246.77. None of the provided answer choices match this calculation, suggesting an error in the question or the answer choices.

Step-by-step explanation:

The student wants to know the interest on a note after 90 days when Ryan Albany issued a $7,400, 90-day, 13.5% note to Jun Company. To calculate interest on the note, we can use the simple interest formula I = PRT, where I is the interest, P is the principal amount, R is the rate of interest, and T is the time period in years.For Ryan Albany's note P (Principal) = $7,400R (Annual interest rate) = 13.5% or 0.135 when expressed as a decima lT (Time period in years) = 90 days / 365 days = 0.2466 years (approximately)Using the formula:I = $7,400 × 0.135 × 0.2466 = $246.77Therefore, the total interest on the note after 90 days is $246.77, which is not one of the options provided. There could be an error in the question or the answer choices.