Jacobs Company borrowed $100,000 at 8 percent interest for three months.

How much interest does the company owe at the end of three months?

A. $8,000

B. $2,000

C. $800

D. $200

B. $2,000

Explanation:

The principal amount is $100,000

Interest rate is 8% usually per year (12 months)

Loan duration, three months:

Annual interest = $100,000.00 x 8%

=$100,000.00x 0.08

=$ 8000.00

Interest for 3 months

=3/12x$8000.00

=0.25x$8000.00

=$2000