Chapter 10 - Step 1. Calculate interest on principal from...

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Chapter 10 Simple Interest Maturity Value (MV) = Principal (P) + Interest (I) Simple Interest (I) = Principal (P) x Rate (R) x Time (T) I = P X R X T Exact Interest Time = Exact number of days 365 Ordinary Interest Time = Exact number of days 360 Principal = Interest Rate x Time Rate = Interest Principal x Time Time (yrs) = Interest Principle x Rate U.S. Rule Any partial loan payment first covers any interest that has built up. The remainder of the partial payment reduces the loan principal.
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Unformatted text preview: Step 1. Calculate interest on principal from date of loan to date of first principal payment Step 2. Apply partial payment to interest due. Subtract remainder of payment from principal Step 3. Calculate interest on adjusted balance that starts from previous payment date and goes to new payment date. Then apply Step 2. Step 4. At maturity, calculate interest from last partial payment. Add this interest to adjusted balance....
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