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Shawn Bixby borrowed $36,000 on a 120-day, 12% note. After 65 days, Shawn paid $3,900 on the note. On day 95, Shawn paid...

Shawn Bixby borrowed $36,000 on a 120-day, 12% note. After 65 days, Shawn paid $3,900 on the note. On day 95, Shawn paid an additional $5,900. 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.)

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Answer #1

After 65 days interest is computed as follows:

= $ 36000 x 0.12 x 65 / 360
= $ 780
So he owes

= $ 36,000 + $ 780

= $ 36,780

So at this time he pays off $ 3,900 leaving him with a debt of

= $ 36,780 - $ 3,900
= $ 32,880 at day 65

Day 95: another 30 days have passed
I = $ 32,880 x 0.12 x 30 / 360
= $ 328.80
so at this time he owes

= $ 32,880 + $ 328.80

= $ 33,208.80, but pays off $ 5,900 leaving with a balance on day 95 of

= $ 33,208.80 - $ 5,900
= $ 27,308.80

It will be another 25 days till the note is due
I = $ 27,308.80 x 0.12 x 25 / 360
= $ 227.57 Approximately

So at that time he owes

= $ 27,308.80 + $ 227.57

= $ 27,536.37

The total interest paid is
= $ 780 + $ 328.80 + $ 227.57
= $ 1,336.37

a. So the total interest will be $ 1,336.37

b. The ending balance will be $ = $ 27,536.37

Feel free to ask in case of any query relating to this question

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