Question

sara borrowed $5,000 on a 120-day 5% note. sara paid $500 toward the note on day 40. on day 90, she paid an additional $500. using the u.s. rule, her adjusted balance after the first payment is:

Answer 1

The adjusted balance after the first payment on a $5,000 120-day 5% note can be calculated using the U.S. rule for interest calculation. The interest for the initial 40 days is $21.92, which is subtracted from the payment of $500 to get an adjusted balance of $478.08. This adjusted balance is then used to calculate the interest for the remaining 80 days, resulting in a final adjusted balance of $499.06.

Step-by-step explanation:

The adjusted balance after the first payment can be calculated using the U.S. rule, which states that interest is calculated on the original principal for the initial time period and then on the adjusted principal for subsequent time periods.
First, calculate the interest for the initial 40 days. The interest is determined using the formula:

Interest = Principal × Rate × Time

= $5,000 × 0.05 × (40/365)

= $21.92

Then, subtract the interest from the payment: $500 - $21.92

= $478.08

This adjusted balance will be used as the principal for the remaining 80 days.

Using the same formula, calculate the interest for the remaining 80 days:

Interest = Principal × Rate × Time

= $478.08 × 0.05 × (80/365)

= $20.98

Add the interest to the adjusted balance after the first payment: $478.08 + $20.98 = $499.06

Therefore, the adjusted balance after the first payment is $499.06.