2 chapter assignments, 2 xtra credits, 1 practice final and the Final on basic biz math

LU 10-3 Practice Quiz (p. 263)

Polly Flin borrowed $5,000 for 60 days at 8%. On day 10, Polly made a $600 partial payment. On day 40, Polly made a $1,900 partial payment. What is Polly’s ending balance due under the U.S. Rule (assume a 360-day year)?

Given: P = $5,000 R = 8% = .08 T = 60 days

On day 10: Partial Payment of $600 and 10 days of interest

I = P x R x T I = $5,000 x .08 x (10/360) I = $11.11

According to the U.S. Rule, accrued interest must be paid before any payment to principal.

Payment to Principal = $600 - $11.11 = $588.88 to apply to the Principal Adjusted Balance = $5,000 - $588.88 Adjusted Balance = $4,411.11

On day 40: $1,900 partial payment and 30 days of interest

I = $4,411.11 x .08 x (30/360) I = $29.41 Payment to Principal = $1,900 - $29.41 = $1,870.59 to Principal Adjusted Balance = $4,411.11 - $1,870.59 Adjusted Balance = $2,540.52

At Maturity: 20 days of interest

I = $2,540.52 x .08 x (20/360) I = $11.29 MV = Adjusted Balance + Interest MV = $2,540.52 + $11.29 MV = $2,551.81

Answer: Polly’s ending balance due at maturity is $2,551.81.