Question

Rich is attending a 4-year college. As a freshman, he was approved for a 10-year, federal unsubsidized student loan in the amount of $7,900 at 4.29%. He knows he has the option of beginning repayment of the loan in 4.5 years. He also knows that during this non-payment time, interest will accrue at 4.29%.

Answer 1

Answer:

During the non-payment period of 4.5 years, Rich will accrue interest of $1,525.095.

Step-by-step explanation:

As he knows that he has option of beginning repayment of the loan in 4.5 years at the so at rate of 4.29% of $7,900 interest will be:

After first year: 4.29% of 7900

 $=\frac{4.29}{100}*7900\\ =338.91$

So, after the tenure of 4.5 years, to find total interest, the interest will be multiplied by 4.5:

=338.91*4.5

=1525.095