Question

"Shangrov" Company prepared a promissory note with a face value of $75,000, payable after 90 days, at a rate of 15%. The date of issue of the promissory note is October 2, 2016. Calculate the interest amount of the promissory note. Assume 365 days in a year. (Round the answer to the nearest dollar.)

Answer 1

$2,744

Step-by-step explanation:

The computation of the interest amount is shown below:

= Face value of promissory note × rate of interest × number of days ÷ total number of days in a year

= $75,000 × 15% × 90 days ÷ 365 days

= $2,744

By multiplying the face value with the rate of interest and the number of days we can find out the interest expense and the same is shown above