Christina Hercher borrowed $50,000 on a 90 day, eight percent note. Christina paid $3,000 toward the note on day 40. On day 60 she paid an additional $4,000. Using the U.S. Rule, Christina's adjusted balance after the first payment is: (Points : 1)
$1,008.89
$48,008.89
$47,444.44
$44,744.44
None of these
See 11:06pm post.
To calculate the adjusted balance using the U.S. Rule, we need to take into account the partial payments made by Christina. The U.S. Rule states that any partial payment made reduces the principal balance and adjusts the interest charge accordingly.
Here's how we calculate the adjusted balance:
1. Calculate the interest on the original loan amount for 40 days:
Principal Balance = $50,000
Interest Rate = 8% per year
Number of days = 40
Interest Charged = (Principal Balance * Interest Rate * Number of days) / 365
= ($50,000 * 0.08 * 40) / 365
= $4383.56 (rounded to the nearest cent)
2. Subtract the first payment of $3,000 made on day 40 from the principal balance:
Adjusted Principal Balance = Principal Balance - First Payment
= $50,000 - $3,000
= $47,000
3. Calculate the interest on the adjusted principal balance for the remaining 50 days:
Principal Balance = $47,000
Interest Rate = 8% per year
Number of days = 50 (90 - 40)
Interest Charged = (Principal Balance * Interest Rate * Number of days) / 365
= ($47,000 * 0.08 * 50) / 365
= $6471.23 (rounded to the nearest cent)
4. Add the interest charges from step 1 and step 3 to get the total interest charged:
Total Interest Charged = Interest Charged in step 1 + Interest Charged in step 3
= $4383.56 + $6471.23
= $10,854.79 (rounded to the nearest cent)
5. Add the total interest charged to the adjusted principal balance to get the adjusted balance:
Adjusted Balance = Adjusted Principal Balance + Total Interest Charged
= $47,000 + $10,854.79
= $57,854.79 (rounded to the nearest cent)
Therefore, the adjusted balance after the first payment is $57,854.79.