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Mumz [18]
3 years ago
13

A student loan program allows college students to borrow money at 7 percent annual interest

Mathematics
1 answer:
lozanna [386]3 years ago
5 0

Answer:

$46,271.89

Step-by-step explanation:

First, we calculate the effective annual rate(given the annual rate compounded monthly is 7%):

i_n=(1+i/n)^n-1\\\\i_{12}=(1+0.07/12)^{12}-1\\\\i_{12}=0.07229008

We can now determine the future value of a $35,000 loan at an effective rate of 7.229008% p.a:

FV=P(1+i)^n, n=4, P=35000, i=0.07229008\\\\=35000(1+0.07229008)^4\\\\=46271.89

Hence, the student has accumulated $46,271.89 at the end of 4 years.

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