On January 15, business man Dave Nile takes out a $950,000 loan at 4.25% annual interest. The maturity date (the day RR has to pay off the loan) is November 1^st.

1. How much will Dave Nile have to pay on November 1^st?

(950,000 X 4.25%) X 9.5/12 = $31,963.54

Interest for 9.5 half months is calculated (Jan 15 -Oct 31)

Principal amount = $950,000

Total sum to be repaid = ($950,000 + 31,963.54)

= $981,963.54

Dave Nile will have to pay $981,963.54 on November 1st.

2. Suppose instead of paying off the entire loan on November 1^st, Mr. Nile decides to pay $200,000 on May 1^st, and $350,000 on August 1^st.

1. How much interest did Mr. Nile pay on May 1^st?
2. How much of Mr. Niles $200,000 payment went to pay off the principal, $950,000?
3. What is the new principal (or how much more does Mr. Nile have to pay)?
4. How much interest did Mr. Nile pay on August 1^st.
5. How much of Mr. Niles $350,000 payment went to pay off the principal?
6. What is the new principal (or how much more does Mr. Nile have to pay)?
7. How much does owe on November 1^st?
8. How much of Mr. Niles final payment went to pay off the principal?
9. What is the total amount of money Mr. Nile paid for the loan?
10. Create a table. The rows must be the three dates he made payments. The columns must be the payment, principle (how much he paid towards the principle), the interest, and how much he owes after making the payment. You must also add a row that totals the columns. Make sure the rows and columns are clearly labeled.
11. How much did he save by making the two partial payments.