A loan of $1,000 is due in 1 year with simple interest at 14 ½% per annum. The debtor pays $200 in 3 months and $400 in 7 months. Find the balance due in 1 year to repay the loan.
P = Po + Po*r*t = 1,000 + 1000*0.145*1 = $1,145,
1145 - (200 + 400) = $545 = Bal. due in 1 yr.
To find the balance due in 1 year to repay the loan, we need to calculate the interest for the remaining period and add it to the amount that has already been paid.
First, let's calculate the interest for the remaining 5 months of the loan. We can use the simple interest formula:
Interest = Principal × Rate × Time
where:
- Principal is the original loan amount of $1,000
- Rate is the annual interest rate of 14 ½% or 0.145
- Time is the remaining period of 5 months or 5/12 years
Interest = 1000 × 0.145 × (5/12) = $60.42
Next, we add the interest to the amount that has already been paid.
Total Amount Paid = $200 + $400 = $600
Balance Due = Principal + Interest - Total Amount Paid
= $1000 + $60.42 - $600 = $460.42
Therefore, the balance due in 1 year to repay the loan is $460.42.