Question

Jacobs Company borrowed $100,000 at 8 percent interest for three months.

How much interest does the company owe at the end of three months?
A. $8,000
B. $2,000
C. $800
D. $200

Answer 1

Answer:

B. $2,000

Explanation:

The principal amount is $100,000

Interest rate is 8% usually per year ( 12 months)

Loan duration, three months:

Annual interest = $100,000.00 x 8%

   =$100,000.00x 0.08

   =$ 8000.00

Interest for 3 months

   =3/12x$8000.00

   =0.25x$8000.00

   =$2000