Problema Solution
Myerson borrowed $8,500 at 9% ordinary interest for 200 days. After 120 days, he made a partial payment of $4,000. What is the final amount due on the loan?
Answer provided by our tutors
Ordinary interest is calculated on the basis of a 360 days per year.
Interest due at the end of 120 days
= 8500(120/360)(0.09) = $255
Of the $4000 payment, $4000 - $255 = $3,745 will go towards reducing the debt.
so balance owing = 8500 - 3745 = $4755
Interest for the remaining 80 days
= 4755(0.09)(80/360) =95.10
The final amount due on the loan = 4755+95.10 = $4,850.10.