SOLUTION: 1. A person borrowed 15000 AED on a 5% simple interest per year. The loan period is 3 years. He plans to make a partial payment of 5000 AED after the first year. (a) What is th

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: 1. A person borrowed 15000 AED on a 5% simple interest per year. The loan period is 3 years. He plans to make a partial payment of 5000 AED after the first year. (a) What is th      Log On

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Question 931704: 1. A person borrowed 15000 AED on a 5% simple interest per year. The loan period is 3 years. He plans to make a partial payment of 5000 AED after the first year.

(a) What is the adjusted principal after the partial payment?
(b) What is the adjusted balance due at the maturity date?
(c) How much interest will he save by making this partial payment?
Answer by ptfile(81) About Me  (Show Source):
You can put this solution on YOUR website!
a.)FV = PV(1+rt)
   FV = 15000(1+(.05)(1))
   FV = 15750
   Adjusted Principal = 15750 - 5000
   Adjusted Principal = 10750 AED

b.)FV = PV(1+rt)
   FV = 10750(1+(.05)(2))
   FV = 11825 AED

c.)I = PRT
   First Year
   I = (15000)(.05)(1)
   I = 750 
   With Partial Payment
   I = (10750)(.05)(2)
   I = 1075
   Without Partial Payment
   I = (15000)(.05)(3)
   I = 2250
   Interest saved
   I = 2250-(1075+750)
   I = 2250-1825
   I = 425 AED