# USAQuestion for calculating Default Interest

#### Shampton

I have a client with a promissory note and I need to calculate what will be due.

The note was for \$16,000 dated 5/1/15.
Interest at the annual rate of 10% per annum, compounded annually.
After maturity or a default, interest shall accrue on the outstanding balance at the rate per annum of the stated interest rate plus 5% (the "Default Rate").

The maturity date is 5/1/17

I calculated \$1600 interest for year one and \$1760 for year two.
What steps do I take next? I've done it a few ways with different results so I wanted to see how it should be done to see if it matched anything I've tried.

Thank you in advance for your help.

#### Drmdcpa

VIP Member
Not sure what you are asking.

#### Shampton

Sorry, I wasn't clear in my message. I need to calculate the interest from the maturity date to present to add to the first two years. The note wasn't paid by the maturity date so I need to know how to calculate the amount due.

#### kirby

VIP Member
So far you are correct. \$1,600 interest year one and \$1,760 year two.
So at 5/1/17 the amount due was \$19,360

Based on what you wrote above, the 15% interest is on the unpaid balance at maturity.

That means 15% interest on the \$19,360 until full payment is made
So if unpaid for a full year then it is \$2,904 to be added to the \$19,360

Given it is \$2,904 for a full year, you can divide by 12 to get a monthly interest amount (then multiply by unpaid months and add that to the \$19,360) or go daily (some use 360 for ease)

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