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The following 12%, $1,000 notes were issued on December 1. Which of the following is the correct method of calculation for the interest accrued as of December 31 of the same year on each of the notes described?
Expert Answer
For calculating interest on notes, we have interest rate i.e 12 % , Face value of the notes i.e $ 1000 and these notes were issued on December 1 which means these notes existed for 1 month only in the year concerned.
Therefore, interest accrued = 1000 * 12 % * 1/12 = $ 10
