When interest is calculated for periods shorter than a year, the formula to calc

Question

When interest is calculated for periods shorter than a year, the formula to calculate interest is:

A. I = P × R × T, where I = interest calculated, P = principal, R = annual interest rate, and T = number of months.

B. I = P × R × T, where I = interest calculated, P = principal, R = annual interest rate, and T = (number of months ÷ 12).

C. I = P × R × T, where I = interest calculated, P = principal, R = monthly interest rate, and T = (number of months ÷ 12).

D. I = (MV P)/T, where I = interest calculated, MV = maturity value, P = principal and T = number of months.

Explanation / Answer

I = P × R × T, where I = interest calculated, P = principal, R = annual interest rate, and T = (number of months ÷ 12)

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