Question

You borrow $2450 at 7.8% compounded weekly for tuition. while you do not have to make payments for the 3 years that you are in school, the interest is compounding. what is your loan balance after the 3-year grace period (if you've made no payments)?

Answer 1

To calculate the loan balance after the 3-year grace period, use the compound interest formula: A = P(1 + r/n)^(nt). Plugging in the values, the loan balance is approximately $3017.32.

Step-by-step explanation:

To calculate the loan balance after the 3-year grace period, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A is the loan balance after the grace period
• P is the initial loan amount ($2450)
• r is the interest rate per period (7.8% = 0.078)
• n is the number of compounding periods per year (52)
• t is the number of years (3)

Plugging in the values, we get:

A = 2450(1 + 0.078/52)^(52*3)

Calculating this expression, the loan balance after the 3-year grace period is approximately $3017.32.