Question

A loan of $1000 is to be paid back, with interest, at the end of 1 year. After 3 months, a partial payment of $300 is made. Use the US Rule to determine the balance due at the end of one year, considering the partial payment. Assume a simple interest rate of 9%.

Answer 1

Loan Amount = $1,000

Simple Interest per month = 9%/12 = 0.75%

Interest on loan for first 3 months = $1,000 * 0.75% *3 months = $22.50

Total Loan Amount after 3 months = $1,000 + $22.5 = $1,022.50

Amount paid after 3 months =$300

Balance after 3 months = $1,022.50 - $300 = $722.50

Interest on Balance for 9 months = $722.50 * 0.75% * 9 months = $48.76875

Amount to be paid after 1 year = $722.50 + $48.76875 = $771.26875

Accorsing to US rule, balance due at the end of 1 year is $771.27