Use the United States Rule and/or Banker’s Rule to determine the balance due on the note at the date of maturity. (The effective date is the date the note was written.)
Principal - 6000
Rate - 5%
Effective Date - May 15
Maturity Date - November 1
Partial Payment Amount - $1500
Partial Payment Date -August 15
Also Answer the following questions:
1. NUMBER OF DAYS BETWEEN EFFECTIVE DATE AND PARTIAL PAYMENT =
2. INTEREST ON PARTIAL PAYMENT DATE = PRINCIPAL X RATE X (NO. OF DAYS IN #1)/360 =
3. PRINCIPAL PAID ON PARTIAL PAYMENT DATE = PARTIAL PAYMENT - INTEREST PAID =
4.NEW PRINCIPAL = ORIGINAL PRINCIPAL - AMOUNT PAID IN #3 =
5.NUMBER OF DAYS BETWEEN PARTIAL PAYMENT DATE AND MATURITY DATE =
6. INTEREST IN MATURITY DATE = NEW PRINCIPAL X RATE X (NO. OF DAYS IN #5) /360 =
7. BALANCE DUE ON MATURITY DATE = NEW BALANCE + INTEREST ON MATURITY DATE =
To determine the balance due on the note at the date of maturity, we can use the United States Rule and the Banker's Rule. Here's how you can calculate it:
1. Determine the interest due from the effective date to the partial payment date (August 15):
- Calculate the number of days from May 15 to August 15 (92 days).
- Convert the interest rate from a yearly rate to a daily rate: 5% / 365 days = 0.01369863% per day.
- Calculate the interest accrued from May 15 to August 15 using the formula: Principal * Daily Rate * Number of Days.
Interest accrued = $6000 * 0.01369863% * 92 days = $7.99 (rounded to the nearest cent).
2. Subtract the partial payment amount from the balance at the partial payment date:
Balance at partial payment date = Principal - Partial Payment Amount = $6000 - $1500 = $4500.
3. Determine the interest due from the partial payment date to the maturity date (November 1):
- Calculate the number of days from August 15 to November 1 (78 days).
- Calculate the interest accrued from August 15 to November 1 using the formula: Balance at partial payment date * Daily Rate * Number of Days.
Interest accrued = $4500 * 0.01369863% * 78 days = $4.10 (rounded to the nearest cent).
4. Add the interest accrued from step 1 and step 3 to the balance at the partial payment date from step 2 to get the balance due on the note at the date of maturity:
Balance due on maturity date = Balance at partial payment date + Interest accrued from step 1 + Interest accrued from step 3
= $4500 + $7.99 + $4.10
= $4512.09 (rounded to the nearest cent).
Therefore, the balance due on the note at the date of maturity is approximately $4512.09.