A Term Deposit of $7 200 was taken out on 1 July 2018. Interest is earned at 5% per annum. Interest is payable on 30 September and 30 March each year. What amount of interest will be received as a cash receipt from the Bank on 30 March 2019?

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BlackTom AI · Accepted Answer

We start by identifying the key details of the deposit and the timing of interest payments. The term deposit is 7,200 at 5% per year, with interest paid on 30 September and 30 March each year. The question asks for the cash receipt on 30 March 2019.
Option a: "a. $180". This corresponds to the interest earned from 1 October 2018 to 30 March 2019 (a 6-month period). Calculating: 7,200 × 5% × (6/12) = 7,200 × 0.05 × 0.5 = 7,200 × 0.025 = 180. Since 30 March 2019 falls after the 1 October 2018 to 30 March 2019 period, this is a valid cash receipt amount for that interval.
Option b: "b. $720". To get 720, the interest would need to be 10% for six months or 20% per year, which does not match the given rate of 5% per year. Therefore this is far too large relative to the actual rate and period.
Option c: "c. $360". A 12-month annual interest on 7,200 would be 7,200 × 5% = 360. However, the question asks for the cash receipt on 30 March 2019, which covers only six months of the year (1 Oct 2018 to 30 Mar 2019), not the full 12 months. So 360 would be incorrect for the 6-month period in question.
Option d: "d. $90". This value corresponds to the interest for the first 3 months of the investment (1 Jul 2018 to 30 Sep 2018). While this is a real cash receipt that occurred on 30 September 2018, it is not the amount received on 30 March 2019, so it does not answer the question.
Summarizing the reasoning: the only amount that matches the interest earned for the 6-month interval from 1 October 2018 to 30 March 2019, given a 5% annual rate, is 180. The other options either correspond to different time intervals or misstate the amount for the full-year rate, making them incorrect for the date in question.

MUF0022 Accounting Unit 2 - Semester 2, 2025 Quiz: BDA: Revenues

A Term Deposit of $7 200 was taken out on 1 July 2018. Interest is earned at 5% per annum. Interest is payable on 30 September and 30 March each year. What amount of interest will be received as a cash receipt from the Bank on 30 March 2019?

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