A debt of $60,000 is to be paid off by installments of $20,000 in 20 days from today,$1500 in 60 days from today and a final payment of $X in 85 days from today.If simple interest is charged at r = 16% and the declining balance method is used,what is X?

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Quizplus · Accepted Answer

The declining balance method involves calculating interest on the remaining balance of the debt after each payment. The interest rate per day (r) is 16% per annum, so daily interest rate = 16% / 365 = 0.0438356%.1. For the first $20,000 payment at 20 days:   - Interest = $60,000 * 0.000438356 * 20 = $525.48   - New balance = $60,000 + $525.48 - $20,000 = $40,525.482. For the $1,500 payment at 60 days:   - Interest = $40,525.48 * 0.000438356 * 40 = $710.61   - New balance = $40,525.48 + $710.61 - $1,500 = $39,736.093. For the final payment at 85 days:   - Interest = $39,736.09 * 0.000438356 * 25 = $436   - Final payment (X) = $39,736.09 + $436 = $40,172.09

A Debt of $60,000 Is to Be Paid Off by Installments