Question

Dirk Ward borrowed $14,000.00 for investment purpeses on May 6 on a demand note providing for a variable tato of inserest and payment of any accrued interest on Decernber 31 . He paid se00 on June 10. $150 on September 4 , and $400 on Nowember 5 . How much is the aceruet interest on Docember 31 if the rate of inserest was 8% on May 6 . 8.25% efflactive August 1 , and a. 5% offective November 1 ?

Answer 1

The accrued interest on December 31 is $2,594.79.

Step-by-step explanation:

To calculate the accrued interest on December 31, we need to find the interest for each period and add them together.

From May 6 to June 10, the time period is 35 days (100 days - 65 days). The interest is $700 ($14,000 x 0.05).

From June 10 to September 4, the time period is 86 days. The interest is $1,430 ($14,000 x (0.0825/365) x 86).

From September 4 to November 5, the time period is 62 days. The interest is $310 ($14,000 x (0.0825/365) x 62).

From November 5 to December 31, the time period is 56 days. The interest is $154.79 ($14,000 x (0.05/365) x 56).

The total accrued interest on December 31 is $2,594.79 ($700 + $1,430 + $310 + $154.79).