Problema Solution
You decide to take out a $20000 simple interest loan at 4%, on the date unit 4 started for you. 30 days after the first payment, you pay another $6000.What is your new principal?
Answer provided by our tutors
P = $20,000
r = 4% or 0.04
T = 30 days = 30/360 = 1/12 years and Total paid = $8,000
Procedure for payment on day 30:
Step1. Calculate Interest
I = PrT = 20,000.00 × 0.04 × (1/12) = $66.67
Step2. The remainder of the payment is principal: Principal = Total paid - Interest portion
Principal = $6,000.00 - $66.67 = $5,933.33
Step 3 New balance = Previous balance - Principal portion of payment
Balance = $20,000.00 - $5,933.33 = $14,066.67
the new principal is the previous balance thus the new principal is $14,066.67.