Interest of $1,632 with Principal of $16,000 for 306 Days

question 88

Multiple Choice

Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of:

• A)10%
• B)12%
• C)12 1/2%
• D)13%
• E)None of these

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is a non-operating expense shown on the income statement.

Straight-line Amortization

A method of reducing the carrying amount of an intangible asset over a fixed period of time in a systematic and rational manner.

Premium Amortization

The gradual expense or reduction of the premium paid above the par value of a debt security over its remaining term.

Interest Expense

The charge an entity bears for the funds it has borrowed over a set period.