Jeff Edsell owes $5,000 on a 4%, 90-day note. On day 50, Jeff pays $600 on the note. On day 80, Jeff makes an $800 additional payment. Assume a 360-day year. What is Jeff’s adjusted balance after day 50 and after day 80? What is the ending balance due?
600
To calculate Jeff's adjusted balance after day 50 and after day 80, we need to consider the interest accrued and the subsequent payments made.
First, let's calculate the interest accrued on the note:
Interest accrued on day 50:
For the period from day 1 to day 50, there would be 50/360 * $5,000 * 0.04 = $22.22 of interest accrued.
Adjusted balance after day 50:
To find the adjusted balance after day 50, we subtract the payment of $600 from the original balance of $5,000:
Adjusted balance after day 50 = $5,000 - $600 = $4,400.
Now, let's calculate the interest accrued on the adjusted balance after day 50:
Interest accrued on day 80:
For the period from day 51 to day 80, there would be 30/360 * $4,400 * 0.04 = $14.67 of interest accrued.
Adjusted balance after day 80:
We subtract the payment of $800 made on day 80 from the adjusted balance after day 50:
Adjusted balance after day 80 = $4,400 - $800 = $3,600.
To find the ending balance due, we need to calculate the interest accrued on the adjusted balance after day 80:
Interest accrued on the adjusted balance after day 80:
For the period from day 81 to day 90, there would be 10/360 * $3,600 * 0.04 = $4.00 of interest accrued.
Ending balance due:
We add the interest accrued on the adjusted balance after day 80 to the adjusted balance after day 80:
Ending balance due = $3,600 + $4.00 = $3,604.00.
Therefore, Jeff's adjusted balance after day 50 is $4,400, and his adjusted balance after day 80 is $3,600. The ending balance due is $3,604.00.