Question

Shawn bixby borrowed $24,000 on a 210-day, 12% note. After 85 days, Shawn paid $2,700 on the note. On day 130, Shawn paid an additional $4,700. Use ordinary interest. What is the remaining balance on the note?

Answer 1

The remaining balance on Shawn Bixby's note is found by calculating simple interest for 85 days before the first payment and another 45 days before the second payment, reducing the principal by the amounts paid each time.

Step-by-step explanation:

Shawn Bixby borrowed $24,000 on a 210-day, 12% note. To determine the remaining balance on the note after two partial payments, one has to calculate the interest accrued and the reduction in the principal amount. Ordinary interest (simple interest) is used for these calculations, which is computed as I = PRT, where P is the principal, R is the annual interest rate (as a decimal), and T is the time in years.

First, calculate the interest for 85 days and subtract the first payment of $2,700 to determine the new principal. Then, calculate the interest on this new principal for the next 45 days (130 - 85) and subtract the second payment of $4,700 to find the remaining balance.

These steps involve several intermediate calculations such as converting days to years (by dividing by 365), applying the interest formula, and adjusting the principal amount after each payment.