Question

Given Principal $13,500, Interest Rate 8%, Time 240 days (use ordinary interest) Partial payments: On 100th day, $6,600 On 180th day, $3,800 a. Use the U.S. Rule to solve for total interest cost.

Answer 1

Total interest cost = $475.04

Step-by-step explanation:

given data

Principal = $13,500

Interest Rate = 8%

Time = 240 days

solution

we get On 100th day interest that is

interest = principal × rate × time ...................1

put here value

interest = 13500 × 0.08 ×
`(100)/(360)`

interest = $300

and

Total amount after paying 6,600 is

amount after 6,600 = interest + principal - 6600

amount after 6,600 = 300 + 13500 - 6600

amount after 6,600 = $7200

and

On 180th day interest that is

interest = $7200 × 0.08 ×
`(180)/(360)`

interest = $128

and

on 240th day Principal amount will be

Principal amount = 7200 + 128 - 3800

Principal amount = $3528

so now

interest will be for 60 day

Interest = $3528 × 0.08 ×
`(60)/(360)`

Interest = $47.04

so Total interest cost till 240 days will be

Total interest cost = $300 + $128 + $47.04

Total interest cost = $475.04