2. Maryam pays $3000 on the 30th day of a $7,000, 120-day, and 8% loan.
a. What is the adjusted principal after the partial payment is made if ordinary interest is applied? (5 points)
Answer:
b. What is the adjusted balance due at maturity? (5 points)
Answer:
(a) Interest due when the payment is made is $7000*(0.08)/12 = $46.67
(30 days is considered 1/12 of a year)
Adjusted principal on that date, after payment, is 7000 - 3000 + 46.67
= $ 4046.67
(b) At the end of 90 more days, if no other payments are made, the adjusted balance will be
$4046.67*(1 + 0.08/4) = $4127.60
(90 days is considered 1/4 of a year)