Brian borrowed $400 for 1 year. His payments are $34.50 a month. If he decides to pay the loan off after 8 months, find the amount of interest that he will save.

Answer 1

P = Po + Po*r*T = 34.50*12,
400 + 400*r*1 = 414,
r = 0.035 = 3.5%. = APR.
414 - 400 = $14. = Int. after one yr.

I = Po*r*T = 400*0.035*(8/12) = $9.33 = Int. after 8 months.

14 - 9.33 = $ __ = Int. saved.