Question

Kim is attending a 4 year college. as a freshman she was approved for a 10 year federal unsubsidized student loan in the amount of 7900 at 4.29% she knows she has the option of beginning repayment of the loan in 4.5 years she also knows that during this nonpayment time interest wil accrue at 4.29%. How much interest will kim acure during the 4.5 year nonpayment period

a) $187.41
b) $1,495.20
c) $170.10
d) $340.20

Answer 1

Kim will accrue $1,495.20 in interest over the 4.5 year nonpayment period on her federal unsubsidized student loan amounting to $7,900 at an interest rate of 4.29%.

Step-by-step explanation:

To calculate the amount of interest Kim will accrue during the 4.5 year nonpayment period on her $7,900 federal unsubsidized student loan at a rate of 4.29%, we use the simple interest formula:

Interest = Principal × Rate × Time

Here, the principal is $7,900, the rate is 4.29% (or 0.0429 when expressed as a decimal), and the time is 4.5 years.

Plugging the numbers into the formula gives:

Interest = $7,900 × 0.0429 × 4.5

Interest = $1,515,655

This means that the correct answer is (b) $1,495.20.