Please show steps solving the question with equation: $2000 is borrowed at a sim
ID: 2806629 • Letter: P
Question
Please show steps solving the question with equation:$2000 is borrowed at a simple interest rate of 8 %. If $700 is paid at the end of 3 months and $800 at the end of 7 months, find the amount due at the end of 1 year using (a) The Merchants Rule (b) the Us rule Please show steps solving the question with equation:
$2000 is borrowed at a simple interest rate of 8 %. If $700 is paid at the end of 3 months and $800 at the end of 7 months, find the amount due at the end of 1 year using (a) The Merchants Rule (b) the Us rule Please show steps solving the question with equation:
$2000 is borrowed at a simple interest rate of 8 %. If $700 is paid at the end of 3 months and $800 at the end of 7 months, find the amount due at the end of 1 year using (a) The Merchants Rule (b) the Us rule
Explanation / Answer
a) Using Merchants Rule:
Particulars Amount($) Amount($) Amount($)
Original Debt in the beginning of the year 2,000
Add: Interest on $2,000 for 1 year 160
Amount after 1 year 2,160
Deduct : Partial payment and their Interest
First payment (after 3 months) 700
Add : Interest on $700 for 9 months remaining 42 742
Second payment (after 7 months) 800
Add : Interest on $800 for 5 months remaining 27 827
Total Partial payment and their interest 1,569
Balance at the end of 1 year 591
b) Using Us rule:
Particulars Amount($) Amount($)
Original Debt in the beginning of the year 2,000
Deduct :
First payment (after 3 months) 700
Deduct : Interest on $2,000 for 9 months remaining 120
Remainder applied to principal 580
Balance after 3 months 1,420
Second payment (after 7 months) 800
Deduct : Interest on $1,420 for 5 months remaining 47
Remainder applied to principal 753
Balance after 7 months 667
Add: Interest on $667 for 5 months remaining 22
Balance at the end of 1 year 689