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Schmidt Company borrows $10,000 from its bank and signs a 6-month note. Interest, which is due quarterly, is specified in the note as 6%. The Interest rate stated in the loan agreement most likely applies
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Schmidt Company borrows $10,000 from its bank and signs a 6-month note. Interest, which is due quarterly, is specified in the note as 6%. The Interest rate stated in the loan agreement most likely applies to?

a) a 6-month period
b) an entire year
c) a 3 month period
d) semi-monthly

User Florin
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1 Answer

5 votes
5 votes

Answer:

b) an entire year

Step-by-step explanation:

Interest rate that is specified on the loan agreement is annual interest rate applicable to the loan on different frequency of interest payments. 6% is the entire years interest rate. Schmidt Company will pay only $150 (10000 x 6% x 3/12 ) for one quarter. Schmidt Company has only two payments of 3 months interest for this loan in six month duration of loan.

User Dabrorius
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