Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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If one year's amount of interest is $120, what is the interest for seven months?

$53.27
$49.31
$70.00
$25.71

The correct answer is: $70.00

To find the interest earned over seven months based on an annual interest amount, you first need to determine the monthly interest rate from the annual interest. Since the annual interest is $120, the monthly interest can be calculated by dividing this figure by 12 (the number of months in a year). This calculation gives: \[ \text{Monthly Interest} = \frac{120}{12} = 10 \] With the monthly interest established as $10, for seven months you multiply the monthly interest by the number of months: \[ \text{Interest for Seven Months} = 10 \times 7 = 70 \] Therefore, the total interest accrued over seven months is $70.00. This is evident as the calculation directly extrapolates from the monthly interest to the desired time frame, aligning perfectly with the concept of simple interest calculation, where time is a critical factor in determining the amount of interest accrued.