Question

On May 1, you sign a $1000 note with simple interest of 8.5% and a maturity date of December 19. You make partial

payments of $475 on June 2 and $200 on November 4. How much will you owe on the date of maturity?

A) $355.79

B) $354.39

C) $359.53

D) $358.96

Answer 1

The amount to be repaid is $379.26.

Explanation:

Period of note from May 1 to December 19 = 233 days

Amount of note or principal = $1,000

Simple interest rate = 8.5%

Maturity date = December 19

Repayments:

June 2 = $475

Nov. 4 = $200

Total paid $675

Simple interest = $54.26 ($1,000 * 8.5% * 233/365)

Total amount to be repaid = $1,054.26

Total amount repaid = 675.00

Balance to be paid on maturity $379.26