Alicia borrowed $8,500 at 6% ordinary interest for 180 days. After 40 days, she made a partial payment of $2,000. After another 70 days, Alicia made a second partial payment of $2,000. What is the final amount due on the loan?
a. $4,687.21
b. $4,684.62
c. $4,500.50
d. $4,755.00
To calculate the final amount due on the loan, we need to calculate the interest and subtract the partial payments from the original loan amount.
First, let's calculate the interest for the first 40 days. The formula for ordinary interest is:
Interest = Principal * Rate * Time
Principal = $8,500
Rate = 6% per year (0.06)
Time = 40 days / 365 days (to convert to years)
Interest = $8,500 * 0.06 * (40/365)
Interest = $93.15 (rounded to two decimal places)
Now, let's subtract the first partial payment of $2,000:
$8,500 + $93.15 - $2,000 = $6,593.15
Next, let's calculate the interest for the next 70 days. Since we've already made a partial payment, the principal for the second period is $6,593.15.
Interest = $6,593.15 * 0.06 * (70/365)
Interest = $79.87 (rounded to two decimal places)
Now, let's subtract the second partial payment of $2,000:
$6,593.15 + $79.87 - $2,000 = $4,672.02
Therefore, the final amount due on the loan is $4,672.02.
However, this answer is not one of the options provided. It's possible that the options are rounded or there may be another calculation error. Please double-check the options or calculations provided.