Question

angelica received a 12 year non subsidized student loan of 17000 at an annual interest rate of 5.5% (compounded monthly) she will begin repaying the loan after she graduates in 4 years how much interest in dollars must she pay on the loan during the time that payments on the loan are not being made

Answer 1

Interest in Dollars that she pay on the loan during the time that payments on the loan are not being made =

= Loan Amount * (1 + r)ⁿ - Loan Amount

Where r is interest rate per period

n is number of period

In case of angelica,

Loan Amount = $17,000

r = 5.50% / 12 = 0.4583%

n = 48 months [12 * 4 years]

Interest in Dollars that she pay on the loan during the time that payments on the loan are not being made =

= $17,000 * (1 + 0.4583$)⁴⁸ - $17,000

= $21,172.66 - $17,000

= $4,172.66

= $4,173

Interest in dollars that must she pay on the loan during the time that payments on the loan are not being made is $4,173.