Question

Raul Fletes borrowed ​$10000 on a 270​-day note that required ordinary interest at 14.42​%. Raul paid ​$5000 on the note on the 90th day. How much interest did he save by making the partial​ payment?

Answer 1

The interest expenses Raul saves by making the partial repayment on the 90th day of the note is: $360.5.

Step-by-step explanation:

Assume the interest calculation is based on a 360-day-per-year basis.

By making partially repayment of $5,000 at the 90th day of the note, Raul has saved the interest expenses incurred for the $5,000 principal for the remaining 180 days of the note ( calculated as 270 days - 90 days).

So, the interest expenses saving is calculated as:

5,000 x 14.42% * 180/360 = $360.5.

So, the answer is $360.5.