Question

Polly Flynn borrowed $5,000 for 60 days at 7%. On day 20 Polly made a $2,000...

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

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Answer #1

>>>>

Amount borrowed = $5,000

Interest upto 20 days = $5,000 * 7% * 20 days / 360 days = $19.4444

Total amount at the time of partial payment = $5,000 + $19.4444 = $5,019.4444

Balance after partial payment = $5,019.4444 - $2,000 = $3,019.4444

Interest for 40 days = Balance after partial payment * 7% *40 days / 360 days

= $3,019.4444 * 7% * 40 /360

= $23.4846

Amount to be repaid = $3,019.4444 + $23.4846 = $3,042.929

Therefore, amount to be repaid is $3,042.93

>>>>

Interest without partial payment = $5,000 * 7% * 60 days / 360 days = $58.3333

Total payment = $5,000 + $58.3333 = $5,058.33

Amount saved = $5,058.33 - $3,042.93 - $2,000 = $15.40

Therefore, amount saved due to partial payment is $15.40

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