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Shawn bixby borrowed $26,000 on a 150-day, 9% note. after 70 days, shawn paid $2,900 on the note. on day 107, shawn paid an additional $4,900. use ordinary interest.

a. determine the total interest use the u.s. rule. (do not round intermediate calculations. round your answer to the nearest cent.)



b. determine the ending balance due use the u.s. rule. (do not round intermediate calculations. round your answer to the nearest cent.)

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ajinems

The total interest is =$875.76

The ending balance due = $19075.76

Calculation of interest using US rule

The US rule states that the year will be calculated in 360 days and not 365

  • At day 70 the interest= 26,000 × 0.09 × 70/360

= 163,800/360

= $455

He owes $26,000+$455 = $26,455 but he pays $2,900 leaving him with a depth of $23,555 at day 70.

  • At day 107: another 37 days has passed, therefore interest = $23,555 × 0.09× 37/360

= 78438.15/360

=$217.88

So at this time he owes $23772.88, but pays off $4900 leaving with a balance on day 107 of $18872.88

It will be another 43 days till the note is due, therefore the interest that would the generated the remaining days =

$18872.88×0.09×43/360

= 73038.0456/360

= $202.88

Therefore at day 150 he is owing $18872.88 + $202.88 = $19075.76 ( ending balance due)

The total interest generated;

= $455+$217.88+$202.88

= $875.76

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