Final answer:
The monthly payment for the loan taken out during college is approximately $213.46. The total interest paid for the original loan is approximately $3,348.57. The monthly payment for the refinanced loan is approximately $23.14 and the total interest paid is approximately $2,777.40.
Step-by-step explanation:
To find the monthly payment for the loan taken out during college, we need to use the formula for the present value of an annuity. The formula is:
PV = PMT * ((1 - (1 + r)^(-n)) / r)
Where PV is the present value of the annuity, PMT is the payment per period, r is the interest rate per period, and n is the number of periods.
Using this formula, for a loan amount of $2,000, interest rate of 7%, and 11 semesters, the monthly payment will be approximately $213.46.
After graduating, the student refinances the loan to a lower interest rate of 6.3% and makes monthly payments for 120 months. To find the new monthly payment, we can use the same formula. Using a loan balance of $2,000, interest rate of 6.3%, and 120 months, the monthly payment will be approximately $23.14.
The total interest paid can be calculated by subtracting the original loan amount from the total payments made, which is the monthly payment multiplied by the number of months. For the original loan, the total interest paid will be approximately $3,348.57. For the refinanced loan, the total interest paid will be approximately $2,777.40.