Final answer:
The interest component for the final payment due on October 29 using the U.S. Rule can be calculated by taking the remaining balance after the first payment, applying the annual interest rate of 10% prorated for the 26 days since the last payment, which amounts to $2.15.
Step-by-step explanation:
To calculate the interest for the October 29 payment using the U.S. Rule, we need to take into account the payment that was already made on October 3 to determine the outstanding balance on which the interest is calculated. The U.S. Rule dictates that any partial payments made toward a loan must first apply to the accrued interest before reducing the principal balance. The original loan amount was $600 with 10% interest.
The first monthly payment of $303.76 was made on October 3. Assuming the interest is calculated monthly, for one month the interest amount would be 10% of $600 divided by 12 months, which is $5. The payment of $303.76 would first subtract this $5 of interest, and the rest goes toward reducing the principal, so the payment would reduce the principal by $298.76 ($303.76 - $5), leaving a balance of $301.24 ($600 - $298.76).
The second payment is made on October 29. To calculate this month's interest, we take the remaining balance of $301.24 and calculate 10% annual interest prorated for the 26 days out of 31 in October since the last payment (26/31 of a month). The interest for this period would be $301.24 x 10% x (26/31) / 12 months = $2.15. This suggests that the interest component of the second payment due on October 29 is $2.15. Therefore, the answer is (A) $2.15.