Question

Adela borrowed $10,500 at 12% ordinary interest for 170 days. After 40 days, she made a partial payment of $3,000. After another 80 days, Adela made a second partial payment of $2,000. What is the final amount due on the loan?

Answer 1

Since there is ordinary interest, there should be 360 days a year calculation.

After 40 days:

Balance amount due = 10,500 + 10,500 × 0.12 × (40/360) – 3,000

                                    = 10,500 + 140 – 3,000

                                    = 7,640

After 80 days:

Balance amount due = 7,640 + 7,640 × 0.12 × (80/360) – 2,000

                                    = 7,640 + 203.73 – 2,000

                                    = 5,843.73

On 170 days:

Final amount = 5,843.73 + 5,843.73 × 0.12 × [{(170 – (40 + 80)}/360]

                        = 5,843.73 + 5,843.73 × 0.12 × (50/360)

                        = 5,843.73 + 97.40

                        = 5,941.13 (Answer)