Question

Nell took out a subsidized student loan of $6000 at a 4.8% APR, compounded

monthly, to pay for her last semester of college. If she will begin paying off
the loan in 10 months with monthly payments lasting for 20 years, what will
be the total amount that she pays in interest on the loan?

A. $9345.60

B. $3345.60

C. $3724.80

D. $9724.80​

Answer 1

Answer: $3345.60

Explanation:

Apex - Took one for the team on the quiz because I forgot to check the rating on the other answer </3

Answer 2

The total interest paid by Nell in 20 years is $3,724.80

C is correct

Explanation:

Nell took out a subsidized student loan of $6000 at a 4.8% APR, compounded monthly.

First we find total amount in 10 months

`A=6000(1+(0.048)/(12))^(10)`

`A=6244.37`

Now, He has to pay loan off on 6244.37 for 20 years at 4.8% APR

Loan Formula:

`P=(PV\cdot r)/(1-(1+r)^(-n))`

PV=6244.37

r=0.048/12

n=240

`P=(6244.37* (0.048)/(12))/(1-(1+(0.048)/(12))^(-240))`

`P=40.52`

Total pay in 20 years = 40.52 x 20 = 9724.80

Total amount took loan = $6000

Interest = 9724.80 - 6000

= $3,724.80

Hence, The total interest paid by Nell in 20 years is $3,724.80