Olivia has taken out a $13,100 unsubsidized stafford loan to pay for her college education. she plans to graduate in four years. the loan has a duration of ten years and an interest rate of 7.6%, compounded monthly. by the time olivia graduates, how much greater will the amount of interest capitalized be than the minimum amount that olivia could pay to prevent interest capitalization? round all dollar values to the nearest cent.

Question

Isiah Mcdowell

Business

3 May, 03:57

Olivia has taken out a $13,100 unsubsidized stafford loan to pay for her college education. she plans to graduate in four years. the loan has a duration of ten years and an interest rate of 7.6%, compounded monthly. by the time olivia graduates, how much greater will the amount of interest capitalized be than the minimum amount that olivia could pay to prevent interest capitalization? round all dollar values to the nearest cent.

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Answers (1)

Know the Answer?

Sincere Gallegos · Answer 1

Below are the choices:

a.

$654.45

b.

$477.27

c.

$995.60

d.

$354.22

Answer A is correct ...

13100 (1+0.076/12) ^ (12*4) - 13100 = 4636.85

13100 (0.076/12) x 4 x 12 = 3982.40

Answer = 4636.85 - 3982.40 = 654.45