Question

Patricia took out an unsubsidized student loan of $16,000 at a 4.8% APR, compounded monthly, to pay for her last two semesters of college. If she will begin paying off the loan in 15 months, how much will she owe when she begins making payments?

Answer 1

She will owe $16987.35 when she begins making payments

Explanation:

* Lets explain how to solve the problem

- The loan is $16,000

- The loan at a 4.8% APR compounded monthly

- She will begin paying off the loan in 15 months

- The rule of the future money is
`A=P(1 + (r)/(n))^(nt)`, where

# A is the future value of the loan

# P is the principal value of the loan

# r is the rate in decimal

# n is the number of times that interest is compounded per unit t

# t = the time in years the money is borrowed for

∵ P = $16,000

∵ r = 4.8/100 = 0.048

∵ n = 12 ⇒ compounded monthly

∵ t = 15/12 = 1.25 years

∴
`A=16000(1+(0.048)/(12))^(12(1.25))=16987.35`

* She will owe $16987.35 when she begins making payments