Question

Britta has been accepted into a 2-year Medical Assistant program at a career school. She has been awarded a $5,000 unsubsidized 10-year federal loan at 4. 29%. She

knows she has the option of beginning repayment of the loan in 2. 5 years. She also knows that during this non-payment time, interest will accrue at 4. 29%.

How much interest will Britta accrue during the 2. 5-year non-payment period?

Answer 1

Britta will accrue approximately $535.63 in interest during the 2.5-year non-payment period.

To calculate the interest accrued during the 2.5-year non-payment period, we can use the formula for simple interest:

Interest = Principal * Rate * Time

In this case:

Principal = $5,000 (the loan amount)

Rate = 4.29% (expressed as a decimal, 0.0429)

Time = 2.5 years

Plugging in these values into the formula, we have:

Interest = $5,000 * 0.0429 * 2.5

Calculating the interest, we get:

Interest = $535.63