Question

Polly Flynn borrowed $5,000 for 60 days at 7%. On day 20 Polly made a $2,000 partial payment. (Assume ordinary interest) what was her final payment? How much did she save by making the partial payment?

Answer 1

principal is p = 5000 $

rate of interest is 7 % per day

so the total interest will be

interest on 5000$ on 7 % interest for 20 days + 3000 $ on 7% for 40 days

now interest is

$\begin{gathered} I=\frac{5000\times7\times20}{100}+\frac{3000\times7\times40}{100} \\ \end{gathered}$$I=7000+8400=15400\text{ \ }$

so she finally paid 15400 + 5000 =20400 $

if she does not make a partial payment then interest will be'

$\begin{gathered} I=\frac{5000\times7\times60}{100} \\ I=21000 \end{gathered}$

difference the interest

21000 - 15400 = 5600 $

so she saves 5600 $ by making the partial payment of 2000$ on 20th day.