Simple Interest on a $620,000, 6%, 18-Month Note Is ________

question 60

Multiple Choice

Simple interest on a $620,000, 6%, 18-month note is ________.

• A) $74,400
• B) $37,200
• C) $27,900
• D) $55,800

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Definitions:

Transactions

Transactions are actions carried out between two or more parties that involve the exchange of goods, services, or financial assets.

Original Issue Discount

Refers to the discount from the par value at which a bond or other debt instrument is issued, resulting in a difference that is treated as tax-exempt or taxable interest over the life of the bond.

OID

Original Issue Discount, the difference between the original issue price of a bond and its par value, which is treated as interest by the IRS.

Computed

Refers to the result obtained after performing a mathematical calculation or processing data using a computer.