Question

Shawn Bixby borrowed $18,000 on a 150-day, 11% note. After 60 days, Shawn paid $2,100 on the note. On day 90, Shawn paid an additional $4,100. Use ordinary interest.

a. Determine the total interest use the U.S. Rule. (Do not round intermediate calculations. Round your answer to the nearest cent.)

b. Determine the ending balance due use the U.S. Rule. (Do not round intermediate calculations. Round your answer to the nearest cent.)

Answer 1

Workings:
	Days for int. calculations	Principal on which int.is calculated	Interest	Partial pmt.	Principal on which int.is calculated
1	2(from 1)	3=Prev.6	4=3*11%*Col.2/360	5=Given	6=3+4-5
	0				18000
0-60	60	18000	330.00	2100	16230.00
60-90	30	16230.00	148.78	4100	12278.78
90-150	60	12278.78	225.11		12503.89
	150		703.89

Interest upto 1st partial payment after 60 days=

18000*11%*60/360=

330

Now, the principal is

18000+330-2100=

16230

Interest upto 2nd partial payment after 90 days=

16230*11%*30/360=

148.78

Now, the principal balance is

16230+148.78-4100=

12278.78

Interest at the final payment after 150 days=

12278.78*11%*60/360=

225.11

Now, the ending principal balance due is

12278.78+225.11=

12503.89

So, the ANSWERS are:

a.Total interest using the US rule

330+148.78+225.11=

703.89

ie.

704

&

b. The ending balance due use the U.S. Rule

12503.89

ie.

12504