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28 November, 13:57

Sodium Inc. borrowed $280,000 on April 1. The note requires interest at 12% and principal to be paid in one year.

How much interest is recognized for the period from April 1 to December 31?

a. $0.

b. $33,600.

c. $8,400.

d. $25,200.

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Answers (1)
  1. 28 November, 17:27
    0
    option (d) $25,200

    Explanation:

    Data provided in the question:

    Amount borrowed = $280,000

    Annual interest rate = 12% = 0.12

    Interest period = April 1 to December 31 i. e 9 months

    or

    = 9 : 12 = 0.75 year

    Therefore,

    Interest for the period from April 1 to December 31

    = Amount borrowed * Interest rate * Time period

    = $280,000 * 0.12 * 0.75

    = $25,200

    Hence,

    The answer is option (d) $25,200
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