Solve the problem.
-On May 1, you sign a $800 note with simple interest of 9.5% and a maturity date of December 19. You make partial payments of $400 on June 2 and $250 on November 4. How much will you owe On the date of maturity?
A) $175.45
B) $178.17
C) $174.26
D) $177.51

Question

Quizplus · Accepted Answer

The correct answer is A.The interest for the first period is $800 x 9.5% x (31/360) = $69.79. After the first payment of $400, the balance is $800 - $400 = $400. The interest for the second period is $400 x 9.5% x (153/360) = $17.36. After the second payment of $250, the balance is $400 - $250 = $150. The interest for the third period is $150 x 9.5% x (45/360) = $18.30. The total interest is $69.79 + $17.36 + $18.30 = $105.45. The total amount owed on the date of maturity is $800 + $105.45 = $905.45. After the partial payments, the amount owed is $905.45 - $400 - $250 = $255.45. The amount owed on the date of maturity is $255.45 - $105.45 = $175.45.

Solve the Problem. -On May 1, You Sign a $800 Note with Simple