Question

Alexah borrowed $8,500 at 6% ordinary interest for 180 days. After 40 days, she made a partial payment of $2,000. After another 70 days, Alexah made a second partial payment of $2,000. What is the final amount due on the loan?

Answer 1

The final amount due on Alexah's loan, after making two partial payments and accounting for ordinary interest, is $4,672.17.

Step-by-step explanation:

To calculate the final amount due on a loan, we need to account for the partial payments made and the accrued interest over the specified periods. In this case, Alexah borrowed $8,500 at 6% ordinary interest for 180 days. She made two partial payments: $2,000 after 40 days and another $2,000 after 110 days total (70 days after the first payment).

First, we calculate the interest accrued up to the first payment:

• Interest = Principal x Rate x Time
• For the first 40 days, Interest = $8,500 x 6% x (40/360) = $56.67 (approx).

After the first payment, the new principal is $6,500 ($8,500 - $2,000). Next, we calculate the interest for the next 70 days on the new principal:

• Interest = $6,500 x 6% x (70/360) = $68.25 (approx).

Now the new principal is $4,500 ($6,500 - $2,000). Lastly, we calculate the interest for the remaining 70 days:

• Interest = $4,500 x 6% x (70/360) = $47.25 (approx).

The total interest accrued over the 180 days is $56.67 + $68.25 + $47.25 = $172.17. Therefore, the final amount due is the last principal plus the total interest, which is $4,500 + $172.17 = $4,672.17.