Q8: Bruce Wayne borrowed $14 300.00 for investment purposes on May 19, on a dema
ID: 3143906 • Letter: Q
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Q8: Bruce Wayne borrowed $14 300.00 for investment purposes on May 19, on a demand note providing for a variable rate of interest and payment of any accrued interest on December 31. He paid $1,300.00 on June 28, $1,450 on September 25, and $4,200.00 on November 15. How much is the final payment on December 31 if the rate of interest was 11.5% on May 19; 8.21% effective August 1; and 6.35% effective November 1? Use the declining balance method and show all calculations Q8: Bruce Wayne borrowed $14 300.00 for investment purposes on May 19, on a demand note providing for a variable rate of interest and payment of any accrued interest on December 31. He paid $1,300.00 on June 28, $1,450 on September 25, and $4,200.00 on November 15. How much is the final payment on December 31 if the rate of interest was 11.5% on May 19; 8.21% effective August 1; and 6.35% effective November 1? Use the declining balance method and show all calculationsExplanation / Answer
The loan to be repaid on December 31st is the total outstanding loan: Let's break down the entire tenure;
Loan borrowed on May 19th; Part repayments on June 28, Sept 25 and Nov 15
Interest rate: 11.5% from May 19 to July 31, 8.21% from Aug 1 to Oct 31, 6.35% from Nov 1 to Dec 31st;
Loan repayment: 1,300 on June 28; 1450 in Sept 25 ; 4,200 on Nov 15
Total amount due as of June 28 = Principal 14,300 + interest from May 19 to June 28
= 14,300 + 11.5/100 *14300 * 41/365 = 14,300 + 184.72= 14,484.72~= 14,485$
After repayment of 1300 on June 28 balance due is 14,485-1300 = 13,185$
Loan due on Sept 25 = due on June 28 + interest accrued from June 28 to Sept 24
= 13,185 + 11.5/100 * 13,185*34/365 + 8.21/100*13185*55/365
= 13,185 + 141.24 + 163.11 = 13,489 $
On Sept 25, 1450 was repaid so outstanding due is = 13,489-1450 = 12,039$
Due as of Nov 15 = 12,039 + interest from Sept 25 to Nov 14
= 12,039 + 8.21/100* 12039*37/365 + 6.35/100* 12039*13/365
= 12,039+100.19 + 27.23 = 12,166 $
Of this, a sum of 4,200 was repaid on Nov 15 so the outstanding amount as of Nov 15th is = 12,166-4200 = 7934$
Amount due as of 31st Dec = amount due as of Nov 15th + interest from Nov 15 to Dec 30
= 7934 + 6.35/100*7934*46/365 = 7934+63.49 = 7997$
Thus, the final payment on Dec 31st as per above repayment schedule is ~7997$
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