Question

When reuben had 3 years left in college, he took out a student loan for $16,902. the loan has an annual interest rate of 4.5%. reuben graduated 3 years after acquiring the loan and began repaying the loan immediately upon graduation.

Answer 1

Reuben will have to pay $19,183.77 when he starts to pay the loan off after 3 years.

Explanation:

There are 3 important parts to this equation:

1) 16,902

2) 4.5%

3) 3 years

First, let's find the interest rate in decimal form. This is easy enough to do.

take the interest rate (4.5%) and divide by 100. You can do this in your head by moving the decimal point but I will just write it out for the example:

4.5/100 = 0.045

Now that we have that number. we want to get the dollar amount for the interest. this is done by taking the loan amount and multiplying it by the decimal form of the percentage:

16,902 * 0.045 = 760.59

Since the interest rate is NOT compounding the rest is simple.

760.59 * 3 = 2,281.77

2,281.77 + 16902 = 19,183.77

Hope this helps.