A 9% amortized loan with a November 1 balance of $40,000 requires the payment of principal and interest at the first of each month. If prorating is done as of the 20ᵗʰ of November, the
A) buyer owes the seller $100.
B) buyer owes the seller $200.
C) seller owes the buyer $100.
D) seller owes the buyer $200.

Question

Quizplus · Accepted Answer

The monthly interest is 40,000 × .09 / 12 = 300 or 300 / 30 =10 per day. So the seller would owe the buyer 20 × 10 = 200 since the buyer will have to pay for the whole month of November on December 1.

A 9% Amortized Loan with a November 1 Balance of $40,000