Question

#9 can anyone help me out here? tacy hirs a sta,500 oo studem kin when she groouates on May 4. and the prime rase is set as \( 5.5 \% \). sne has decided at the end of the grace period to conved une interest to principal and she set

Answer 1

The student will have $264,000 in total after converting the interest to principal at the end of the grace period.

Step-by-step explanation:

Let's break down the problem step by step:

1. The student has a principal amount of $50,000.
2. The interest rate is 5.5%.
3. The student wants to convert the interest to principal at the end of the grace period.
4. The student sets up the formula Principal + Principal x Rate x Time = $500. Let's solve for the rate:
5. $500 = $50,000 x Rate x 5 years
6. Divide both sides by $50,000: $500/$50,000 = Rate
7. The rate is 0.01, which is equivalent to 1%.
8. Now let's calculate the interest:
9. Principal x (1 + Interest Rate) x Time = $50,000 x (1 + 0.055) x 5 years = $50,000 x 1.055 x 5 years = $264,000.
10. The student will have $264,000 in total after converting the interest to principal at the end of the grace period.