   Chapter 5, Problem 16DQ ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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# A business borrows $1,000, signing a note that requires an interest rate of 12% per year and repayment of principal plus interest in a single payment at the end of 1 year. Calculate the total interest on the note. What is the amount of the single payment? To determine Principal amount: The amount of principal is the amount of money which is lent to the borrower. Interest amount: The amount of interest is the amount which is recovered on the money lent to the borrower at a specified rate. To calculate: The total interest and single payment amount. Explanation Given: Borrowed amount by business=$1,000Interest rate=12% per year

Here, as per the above given information, the principal amount is:

Principal amount=$1,000 Now, the amount of interest is to be calculated as: Interest formula=Principal×Rate×Time in months Amount of Principal=$1,000

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