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2 September, 14:26

A loan of $1000 is to be paid back, with interest, at the end of 1 year. Aft er 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%.

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  1. 2 September, 17:56
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    total balance due at the end of 1 year is $769.75

    Step-by-step explanation:

    Given data

    loan amount = $1000

    time period = 1 year

    return = $300

    rate = 9%

    to find out

    balance due at the end of one year

    solution

    we know in question $300 return after 3 month so we first calculate interest of $1000 for 3 month and than we after 3 month remaining 9 month we calculate interest for $700

    interest for first 3 month = (principal * rate * time) / 100 ... 1

    here time is 3 month so = 3/12 will take and rate 9 % and principal $1000

    put all these value in equation 1 we get interest for first 3 month

    interest for first 3 month = (principal * rate * time) / 100

    interest for first 3 month = (1000 * 9 * 3/12) / 100

    interest for first 3 month = $22.5

    now we calculate interest for remaining 9 months i. e.

    interest for next 9 months = (principal * rate * time) / 100

    here principal will be $700 because we pay $300 already

    interest for next 9 months = (700 * 9 * 9/12) / 100

    interest for next 9 months = $47.25

    now we combine both interest that will be

    interest for first 3 months + interest for next 9 months = interest of 1 year

    interest of 1 year = $22.5 + $47.25

    interest of 1 year = $69.75

    so amount will be paid after 1 year will be loan amount + interest

    amount will be paid after 1 year = 1000 + 69.75

    amount will be paid after 1 year is $1069.75

    so total balance due at the end of 1 year = amount will be paid after 1 year - amount paid already

    total balance due at the end of 1 year = $1069.75 - $300

    total balance due at the end of 1 year is $769.75
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