Caridad borrowed $15,500 at 11% ordinary interest for 120 days. After 70 days, she made a partial payment of $3,000. What is the final amount due on the loan?
1
To find the final amount due on the loan, we need to calculate the interest accrued on the remaining balance after the partial payment.
First, let's calculate the remaining balance after the partial payment. Subtract the partial payment amount of $3,000 from the original loan amount of $15,500:
$15,500 - $3,000 = $12,500
Next, let's calculate the interest accrued on the remaining balance. We will use the formula:
Interest = Principal * Rate * Time
Where:
Principal = Remaining balance after the partial payment
Rate = Interest rate expressed as a decimal
Time = Remaining time after the partial payment in years
The interest rate is 11%, so the rate as a decimal is 11/100 = 0.11. The remaining time after the partial payment is 120 days - 70 days = 50 days. Since the interest rate is expressed per year, we need to convert the remaining time to years by dividing by 365:
Time = 50 days / 365 days = 0.1369863 years
Let's plug the values into the formula:
Interest = $12,500 * 0.11 * 0.1369863
Now, calculate the interest:
Interest = $12,500 * 0.11 * 0.1369863 = $187.5
Finally, add the interest accrued to the remaining balance to find the final amount due:
Final amount due = Remaining balance + Interest
Final amount due = $12,500 + $187.5 = $12,687.5
Therefore, the final amount due on the loan is $12,687.5.