Question

Logan took out $23,400 in student loans to attend college at a compound interest rate of 5%. He deferred payments for two years. What will be his loan balance at the end of the two-year deferment?

Answer 1

$25,740

Explanation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year,

then, solving our equation

I = 23400 × 0.05 × 2 = 2340

I = $ 2,340.00

The simple interest accumulated

on a principal of $ 23,400.00

at a rate of 5% per year

for 2 years is $ 2,340.00.