u₁₂ represents the amount of loan remaining after 12 years
How to interpret u₁₂?
The function is given as:
u₀ = 8000
[tex]u_n = u_{n-1}(1 + 0.054) - 500[/tex]
Given that the subscript n in [tex]u_n[/tex] represents number of years and [tex]u_n[/tex] represents the amount left to be paid after n years.
We can conclude that:
u₁₂ represents the amount of loan remaining after 12 years
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