Question

If you need to take out a $80,000 student loan 2 years before duating, which loan option will result in the owest overall cost to you: a subsidized loan with 7.4% Interest for 10 years, a federal unsubsidized loan with 9% interest for 10 years, or a private loan with 5.0% interest and a term of 15 years? How much would you ave over the other options? All payments are deferred for 6 months after graduation and the interest is apitalized. Part: 0/5 Part 1 of 5 (a) Find the total cost of the subsidized loan. The total cost of the subsidized loan is S decimal places, if necessary. 10 Round your answer to two​

Answer 1

$139,200

Explanation:

To find the total cost of the subsidized loan, we need to calculate the total amount of interest that will be added to the loan over the 10-year repayment period. We can use the formula for simple interest:

I = Prt

Where:

I = Interest

P = Principal (the original loan amount)

r = Interest rate (expressed as a decimal)

t = Time (in years)

In this case:

I = 80,000 * 0.074 * 10 = 59,200

The total cost of the loan would be the sum of the principal and the interest:

80,000 + 59,200 = $139,200

So the total cost of the subsidized loan is $139,200.