Myerson borrowed $8,500 at 9% ordinary interest for 200 days. After 120 days, he made a partial payment of $4,000. What is the final amount due on the loan?
But shouldn't ordinary interest be x days out of 360 and exact interest be x days out of 365?
My calculations led me to $4,850.10 as the remaining balance after the payment of $4,000.
MV (120 days)
= $8,500(1+ 9% x 120/360)
= $8,755
= $8,755 - $4,000
= $4,755
MV (80 days)
= $4,755 (1 + 9% x 80/360)
= $4,850.10
Pls tell where $3789 comes from this answer
To find the final amount due on the loan, we need to calculate the interest on the loan for the remaining days after the partial payment was made.
First, let's calculate the interest accrued on the loan for the initial 120 days. The interest formula for ordinary interest is:
Interest = Principal x Rate x Time
The principal is the amount borrowed, which is $8,500, the rate is 9% (convert it to decimal by dividing by 100, giving 0.09), and the time is 120/365 (assuming a year has 365 days).
Interest = $8,500 x 0.09 x (120/365) = $278.90 (rounded to two decimal places)
Next, let's calculate the remaining principal amount after the partial payment. Subtract the partial payment of $4,000 from the original loan amount.
Remaining Principal = $8,500 - $4,000 = $4,500
Now, let's calculate the interest accrued on the remaining principal for the remaining 80 days. Using the same interest formula:
Interest = Remaining Principal x Rate x Time
Interest = $4,500 x 0.09 x (80/365) = $88.22 (rounded to two decimal places)
Finally, to find the final amount due on the loan, add the interest accrued after the partial payment to the remaining principal.
Final Amount Due = Remaining Principal + Interest
= $4,500 + $88.22
= $4,588.22
So, the final amount due on the loan is $4,588.22.
7837
interest due at the end of 120 days
= 8500(120/365)(.09) = 251.51
so of his $4000 payment, $3748.49 will go towards reducing the debt.
so balance owing = 8500 - 3748.49
= 4751.51
interest for the remaining 80 days
= 4751.51(.09)(80/365) =93.73
total owing at the end = 4751.51+93.73
= $4845.23