Question

A company signs a note payable for $4,500 at 11% for 65 days. How much interest (to the nearest cent) will the company owe using a 360-day year? (Round your final answer to the nearest cent.)

A. $88.15

B. $89.38

C. $495.00

D. $99.21

Answer 1

B. $89.38

The interest on $4,500 at 11% for 65 days using a 360-day year is calculated using the formula Interest = Principal × rate × time, which amounts to $89.38 after rounding to the nearest cent. Option B. $89.38 is the correct answer.

Step-by-step explanation:

To calculate the interest on a note payable of $4,500 at 11% for 65 days using a 360-day year, we can use the formula Interest = Principal × rate × time. The principal is $4,500, the annual interest rate is 11% (or 0.11 when expressed as a decimal), and the time is 65/360 years (since we're using a 360-day year).

Calculating the interest:

• Interest = $4,500 × 0.11 × (65/360)
• Interest = $4,500 × 0.11 × 0.1806
• Interest = $89.377

Therefore, rounding to the nearest cent, the company will owe $89.38 in interest.

Among the given options, B. $89.38 is the correct amount of interest to be paid.