Find the adjusted balance due at maturity for a 180 day note of $38,400 at 11.8% ordinary interest if a partial payment of $20,000 is made on the 100th day of the loan.
A) $19,658.67
B) $1258.67
C) $20,174.16
D) $515.49

Question

Quizplus · Accepted Answer

First, we need to calculate the interest accrued on the note for the first 100 days, using the simple interest formula:

Interest = Principal x Rate x Time
Interest = $38,400 x 0.118 x (100/360) = $1,087.20

Next, we need to calculate the new principal balance after the partial payment:

New Principal = Original Principal - Partial Payment
New Principal = $38,400 - $20,000 = $18,400

We can then calculate the interest accrued on this new balance for the remaining 80 days:

Interest = New Principal x Rate x Time
Interest = $18,400 x 0.118 x (80/360) = $622.96

Finally, we can calculate the adjusted balance due by adding the interest from both periods to the new principal:

Adjusted Balance Due = New Principal + Interest1 + Interest2
Adjusted Balance Due = $18,400 + $1,087.20 + $622.96 = $20,110.16

Therefore, the correct answer is C) $20,174.16, which is the adjusted balance due when rounded to the nearest cent.

Find the Adjusted Balance Due at Maturity for a 180