a man borrows rm5000 at 15%.He pays rm2000 in 2 months and rm2000 in 4 months . how much would he have to pay in 6 months to cancel the debt by merchants' rule?by united states rule?
To calculate how much the man would have to pay in 6 months to cancel the debt by the Merchant's Rule and the United States Rule, we need to understand the principles behind these rules.
1. Merchant's Rule: According to the Merchant's Rule, the interest on the loan is calculated on the amount not yet paid at any given time.
2. United States Rule: The United States Rule, also known as the Rule of 78, assumes that interest payment is constant throughout the loan term, regardless of the amount that has already been paid. Under this rule, the interest is spread evenly across the loan period.
Now let's calculate the amount the man would have to pay in 6 months using both rules:
1. Merchant's Rule:
Since the interest is calculated on the amount not yet paid, we will first subtract the amount the man has already paid from the borrowed amount.
Remaining amount after 2 months = Borrowed Amount - Payment after 2 months
Remaining amount after 2 months = RM5000 - RM2000
Remaining amount after 2 months = RM3000
Now, we need to calculate the interest on the remaining amount for the next 4 months. The interest is calculated at 15%, so we can calculate it as follows:
Interest for 4 months = Remaining amount after 2 months * (Interest rate/12) * Number of months
Interest for 4 months = RM3000 * (15/100) * 4/12
Interest for 4 months = RM3000 * 0.15 * 0.33
Interest for 4 months = RM148.50
To cancel the debt using the Merchant's Rule, the man would need to pay the remaining amount plus the interest for four months:
Total payment for 6 months using Merchant's Rule = Remaining amount after 2 months + Interest for 4 months
Total payment for 6 months using Merchant's Rule = RM3000 + RM148.50
Total payment for 6 months using Merchant's Rule = RM3148.50
2. United States Rule:
Under the United States Rule, the interest is spread evenly across the loan period. Since the loan term is 6 months, we can calculate the interest for each month as follows:
Interest for each month = (Borrowed amount * Interest rate)/12
Interest for each month = (RM5000 * 0.15)/12
Interest for each month = RM75
Now, the man would need to pay the remaining amount plus the total interest for 6 months using the United States Rule:
Total payment for 6 months using United States Rule = Remaining amount after 2 months + (Interest for each month * Remaining months)
Total payment for 6 months using United States Rule = RM3000 + (RM75 * 4)
Total payment for 6 months using United States Rule = RM3300
Therefore, the man would have to pay RM3148.50 under the Merchant's Rule and RM3300 under the United States Rule to cancel the debt in 6 months.