Question

On October 1, Hill Corporation signed a 6-month note with principal of $10,000 and interest of $600 due in six months. The stated rate of interest on the note is

a)12%
b)6%
c)3%

Answer 1

The stated rate of interest on Hill Corporation's note is 12%, calculated using the formula for simple interest and the given values of principal and interest over a 6-month period.

Step-by-step explanation:

The question is about determining the stated interest rate on a note signed by Hill Corporation. To find the interest rate, we need to use the formula Interest = Principal × Rate × Time. Given that the principal is $10,000 and the interest is $600 for 6 months (or 0.5 years), we can rearrange the formula to solve for the rate.

The calculation would be: Rate = Interest / (Principal × Time) = $600 / ($10,000 × 0.5) = $600 / $5,000 = 0.12 or 12%. Hence, the stated rate of interest on the note is 12%.