Euromart Tile Company borrowed $40,000 on April 6 for 66 days. The rate was 14% using the ordinary interest rate method. On day 25 of the loan, Euromart made a partial payment of $15,000, and on day 45 of the loan, Euromart made a second partial payment of $10,000. What was the new maturity value of the loan?

1 answer

I=PRT

I=40,000*.14*25/360=$388.89 (interest)

$15,000-388.89=$14,611.11 (amt. of partial payment left to reduce the principal)

40,000-14,611.11=$25,388.89 (adjusted principal balance)

$25,388.89*.14*20/360=197.47

10,000-197.47=9802.53

25,388.89-9802.53=15,586.36

15,586.36*.14*21/360=127.29

15,586.36-127.29=$15,713.65

Maturity Value of the loan is $15,713.65