Lisa Kane borrowed $8000 on an 8%, 60 day note. After 15, days Lisa paid $2000 on the note. On day 45, Lisa paid $4000 on the note. What is the total interest and ending balancce bue by the U.S rule? Use ordinary interest.
To find the total interest and ending balance due by the U.S. rule using ordinary interest, we need to calculate the interest for each payment separately and then subtract those amounts from the original principal.
First, let's calculate the interest for the first payment of $2000 made after 15 days.
Interest = Principal × Rate × Time
Interest = $8000 × 0.08 × (15/365) (since 8% is yearly, we need to convert it to a daily rate by dividing by 365)
Calculating the interest for the first payment:
Interest = $8000 × 0.08 × (15/365) = $65.75 (rounded to the nearest cent)
Now, let's calculate the interest for the second payment of $4000 made after 45 days.
Interest = Principal × Rate × Time
Interest = $6000 (remaining principal after the first payment) × 0.08 × (30/365) (45-15 = 30 days, as the second payment was made on day 45)
Calculating the interest for the second payment:
Interest = $6000 × 0.08 × (30/365) = $39.45 (rounded to the nearest cent)
To find the total interest, we add up the interest from both payments:
Total Interest = $65.75 + $39.45 = $105.20 (rounded to the nearest cent)
To find the ending balance due by the U.S. rule, subtract the total interest from the remaining principal after the second payment:
Ending Balance = Remaining Principal after second payment - Total Interest
Ending Balance = $6000 (remaining principal after the second payment) - $105.20 (total interest)
Calculating the ending balance:
Ending Balance = $6000 - $105.20 = $5894.80 (rounded to the nearest cent)
Therefore, the total interest due by the U.S. rule is $105.20 and the ending balance is $5894.80.