I borrowed $10,000 on a 120-day note that required ordinary interest at 12.19% I paid $5,000 on the note on the 60th day how much interest did I save by making the partial payment
P = Po + Po*r*t
P = 10000 + 10000*(0.1219/360)*60
P = 10000 + 203.17 = $10,203.17 On 60th
day.
I = (10,203.17-5000)*(0.1219/360)*60 =
$105.71 For last 60 days.
It = 203.17 + 105.71 = $308.88 = Total
int. paid.
I = 10000*(0.1219/360)*120 = $406.33 For
120 days.
406.33 - 308.88 = $97.45 = Int. saved.
To find out how much interest you saved by making a partial payment on the 60th day, we need to calculate the interest that would have accrued from the 60th day to the 120th day without the payment and then subtract it from the total interest that would have accrued if you had not made any payments.
First, let's calculate the total interest that would have accrued if you had not made any payments. The formula to calculate the interest is: Interest = Principal x Rate x Time.
Principal = $10,000
Rate = 12.19% expressed as a decimal = 0.1219
Time = 120 days
Interest = $10,000 x 0.1219 x 120/365
= $398.90
Now, let's calculate the interest that would have accrued from the 60th day to the 120th day without the payment.
Principal = remaining balance after payment = $10,000 - $5,000 = $5,000
Rate = 12.19% expressed as a decimal = 0.1219
Time = remaining days = 120 days - 60 days = 60 days
Interest = $5,000 x 0.1219 x 60/365
= $101.64
Finally, to find out how much interest you saved, we subtract the interest without the payment ($101.64) from the total interest ($398.90).
Interest saved = Total interest - Interest without payment
= $398.90 - $101.64
= $297.26
Therefore, by making the partial payment of $5,000 on the 60th day, you saved $297.26 in interest.