Question

Your business signs a ninety-day promissory note for $1,000 at 4% monthly interest. How much interest will you have to pay on a collect basis? $

Answer 1

90 days=3 months
I=1,000×0.04×3=120

Answer 2

Answer:

Interest = $120

Step-by-step explanation:

Given : Your business signs a ninety-day promissory note for $1,000 at 4% monthly interest.

To find : How much interest will you have to pay on a collect basis?

Solution :

Applying interest formula,

$I=P\times R\times T$

Where I is the interest

P is the principal = 1000

R is the rate = 4%=0.04 monthly interest

T is the time 90 days

Time into months

1 month = 30 days

$1 \text{day}=\frac{1}{30} \text{months}$

$90\text{day}=\frac{90}{30}=3 \text{months}$

Substitute all the value,

$I=P\times R\times T$

$I=1000\times 0.04\times 3$

$I=120$

The interest is $120.