Question

Phoebe Company and Smallfish Company borrowed $100,000 at 8% interest for three months. How much interest does the company owe at the end of three months?

A. $2,000

B. $4,000

C. $6,000

D. $8,000

Answer 1

To calculate the interest owed, we can use the formula: Interest = Principal x Rate x Time. Substituting the values given in the question, the company owes $2,000 in interest at the end of three months.

Step-by-step explanation:

To calculate the interest owed, we can use the formula:

Interest = Principal x Rate x Time

Where:

• Principal = $100,000
• Rate = 8% = 0.08
• Time = 3 months = 3/12 = 0.25 years

Substituting these values into the formula, we get:

Interest = $100,000 x 0.08 x 0.25 = $2,000

Therefore, the company owes $2,000 in interest at the end of three months.