Question

Roger Rong borrowed $12,000 on 120 - day 11 percent note. Roger paid $4,000 toward the note on day 40. On day 110 he paid an additional $3,000. Using the U.S. Rule his adjusted balance after the 1st payment is

Answer 1

$8146.67

Explanation:

Under the U.S. Rule, unpaid accrued interest is accumulated separately and is not added to principal. In addition, interest is not calculated until a payment is made.

Principal = $12 000.00

1st period = 40 days

Interest on 1st period

= $12 000 × 0.11 × 40/360 Interest = 146.67

Principal + interest = 12 146.67

-Partial payment = 4 000.00

Adjusted balance = $ 8 146.67

Roger's adjusted balance after the first payment is $8146.67.