Lisa Kane borrowed $8000 on an 8% 60 day note. After 15 days, Lisa paid $2000 on the note. On day 45, Lisa paid $1000 on the note. What is the total interest and ending balance due 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 made by Lisa, as well as the remaining balance after each payment.
First, let's calculate the interest and remaining balance after the first payment of $2000 on day 15.
Interest for the first period (15 days):
Interest = Principal x Rate x Time
Interest = $8000 x 8% x (15/365)
Interest = $261.64 (rounded to the nearest cent)
Remaining balance after the first payment:
Remaining balance = Principal - Payment
Remaining balance = $8000 - $2000
Remaining balance = $6000
Now, let's calculate the interest and remaining balance after the second payment of $1000 on day 45.
Interest for the second period (30 days):
Interest = Remaining balance x Rate x Time
Interest = $6000 x 8% x (30/365)
Interest = $394.52 (rounded to the nearest cent)
Remaining balance after the second payment:
Remaining balance = Remaining balance - Payment
Remaining balance = $6000 - $1000
Remaining balance = $5000
To calculate the total interest, we add the interest from both periods:
Total interest = Interest from the first period + Interest from the second period
Total interest = $261.64 + $394.52
Total interest = $656.16
The ending balance due by the U.S. rule is the remaining balance after the final payment:
Ending balance = $5000 (This was calculated after the second payment on day 45)
Therefore, the total interest is $656.16, and the ending balance due by the U.S. rule is $5000.