## Interest Expense:

Normally the simple interest over the borrowings and the investment is computed by applying the given interest rate for the stated period. Under a simple interest method, the interest is not added to the principal value.

The interest for the year ending as on 31st December would be $500. Explanation: The interest for the year ending as on 31st December would be$500 (\$15,000 x 10% x 4/12).