Question

On January 1, Oscar Corp. borrows $300,000 from Wells Fargo, signing an eight-month note payable, the interest is be computed at a rate of 12 percent per annum. How much interest should be paid on August 31?

Answer 1

On August 31 , $24000 is payable as interest amount

Calculation and Working

As given Note payable is for 8 month, and interest is calculated per annum basis , hence for above problem Interest can be calculated by Simple Interest formula

Simple interest is the fixed rate of amount payable over the principle amount. And is it calculated as follow.

S I = P× r

P is Principle amount of borrowing or deposit

r = Rate of Interest =12% for 12 month , as for 8 month hence = 12/12 ×8 =8%

SI = 300000 × 0.08

SI =$ 24000