Question

As an incoming college freshman, Tina received a 10-year $9,900 Federal Direct

Answer 1

The amount charged on the loan which is the loan interest rate, increases as the time after the initial amount is credited into the account increases.

• The interest on the Federal Direct Unsubsidized Loan after 4 years 6 months is $1,911.195

Reasons:

The given parameter are;

Loan amount, the principal, P = $9,900

Duration of the loan = 10 years

Loan interest rate, R = 4.29%

Required:

The amount of interest that will accrue while she is still in school and over the 6-months grace period for the freshman loan.

Solution:

Based on a similar question on an online source, we have;

Interest, I = P × R × T

Where;

T = The time = The time the freshman is in school + 6 months

Therefore, normally, we have;

T = 4 years + 6 months = 4.5 years

R = 4.29% = 0.0429

Therefore;

Interest, I = 9,900 × 0.0429 × 4.5 = 1911.195

The interest that will accrue while she is still in school and over the 6-months grace period for the loan, I = $1,911.195

Learn more about the interest rate here:

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