Question

Complete the following table by computing the missing amounts for the foll calculations. Round "Annual Interest Rate" to 1 decimal place.) Annual Interest Rate Time Period Interest Earned Principal Amount on Note Receivable $ 60,000 $ 42,000 11.6% b. 6 months 9 months 12 months $ 3,528 $ 2,944 9.2 %

Answer 1

a)

Principal = $60,000

Annual interest rate = 11.6%

Time period = 6 months

Interest earned =  Principal x Annual interest rate x Time period

= 60,000 x 11.6% x 6/12

= $3,480

b)

Principal = $42,000

Annual interest rate = ?

Time period = 9 months

Interest earned = $3,528

Interest earned =  Principal x Annual interest rate x Time period

3,528 = 42,000 x Annual interest rate x 9/12

Annual interest rate = 3,528 x 12/9 x 1/42,000

= 11.2%

c)

Principal = ?

Annual interest rate = 9.2%

Time period = 12 months

Interest earned = $2,944

Interest earned =  Principal x Annual interest rate x Time period

2,944 = Principal x 9.2% x 1

Principal = 2,944 x 100/9.2

= $32,000

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