Problema Solution
Suppose you take out a loan for 180 days in the amount of $13,500 at 11% ordinary interest. After 50 days, you make a partial payment of $1,000. What is the final amount due on the loan?
Answer provided by our tutors
P = $13,500
r = 0.11 or 11% annual interest
t1 = 50 days
the interest after 50 days is
I1 = P*r*(t1/360)
I1 = 13500*0.11*(50/360)
I1 = $206.25
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after 50 days the amount to return will be 13500 + 206.25 = $13,706.25
since a $1,000 partial payment is made the new principal will be 13,706.25 - 1,000 = $12,706.25
P2 = $12,706.25
r = 0.11 or 11% annual interest
t2 = 180-50 = 130 days
the interest after another 130 days will be
I2 = P2*r*(t2/360)
I2 = 12706.25*0.11*(130/360)
I2 = $504.72
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the amount due on the loan will be 12,706.25 + 504.72 = $13,210.9705.