Question

John borrowed $15,000 on a 120-day 5% simple interest note. Sam paid $5000 toward the note on day 50. On day 90 he paid an additional $5000. Assume 360-day year, what is his ending balance due?​

Answer 1

To find the ending balance due on the loan, calculate the interest on the loan and subtract the payments made by Sam.

Step-by-step explanation:

To find the ending balance due on the loan, we need to calculate the interest on the loan and subtract the payments made by Sam.

Step 1: Calculate the interest on the loan. The interest is given by the formula:

Interest = Principal × Rate × Time

In this case, the principal is $15,000, the rate is 5%, and the time is 120 days (or 120/360 years). So, the interest is:

Interest = $15,000 × 0.05 × (120/360) = $250

Step 2: Subtract the payments made by Sam. Sam paid $5000 on day 50 and another $5000 on day 90. So, the total payment made by Sam is $10,000. Subtracting this from the interest:

Total Balance Due = $250 - $10,000 = -$9,750

Therefore, John's ending balance due is -$9,750.