John borrowed money from Stan. He has to pay Stan R500 three months from now and R930 five months from now. Stan charges him an interest rate of 20% per annum, compounded monthly.
John decides to pay Stan back what he owes him two months from now. How much interest will he save?
So P is amt paid, S is principal, R is annual rate, t is years?
What is T? What is 8-2 for?
Thus the interest saved is
Is your answer for the amt paid at the end of the whole time? I don't see how you did anything with the part payback. Where did you do a comparison between the two ways of paying? How are you getting that he pays back less than he borrows?
Try using the compound-interest formula: A = P(1 + r/n)^(nt) where A is amt paid, P is principal, r is annual rate, n is compoundings per annum, t is years.
Find amt paid for 1430 at 20% for 3/12 yrs. Find amt paid for 930 at 20% for 5/12 yrs. Add to get total paid for 1st way.
then find amt paid for 1430 at 20% for 2/12 yrs to get total paid for 2nd way. Then compare to find how much he saves.