Question

On January 1, Year 1, Data Corporation accepts a $10,000 three-month, nine percent promissory note from one of its customers. How much interest will be collected at the maturity date of the note?

A) $225
B) $900
C) $75
D) $450

Answer 1

The amount of interest that will be collected at the maturity date of the note is $225 (Option A).

Step-by-step explanation:

To calculate the interest collected at the maturity date of a promissory note, we use the formula:

Interest = Principal x Rate x Time

In this case, the principal is $10,000, the rate is 9%, and the time is 3 months (or 0.25 years). Plugging in these values:

Interest = $10,000 x 0.09 x 0.25 = $225

Therefore, the amount of interest that will be collected at the maturity date of the note is $225 (Option A).