Question

Hual takes out a $3300 student loan at 6.8% to help him with 2 years of community college. After finishing the 2 years, he transfers to a state university and borrows another $11,800 to defray expenses for the 5 semesters he needs to graduate. He graduates 4 years and 4 months after acquiring the first loan and payments are deferred for 3 months after graduation. The second loan was acquired 2 years after the first and has an interest rate of 7.5%. Find Huai's monthly payment when regular payments begin.

Answer 1

Huai's monthly payment when regular payments begin is $331.84.

Step-by-step explanation:

To find Huai's monthly payment when regular payments begin, we need to calculate the total amount of the loans and the interest accumulated over the payment period. Let's break down the calculations:

First loan: $3300 for 2 years at an interest rate of 6.8%. The total amount accumulated is $3300 * (1 + 6.8/100)^2 = $3667.38

Second loan: $11,800 for 5 semesters (around 2 years) at an interest rate of 7.5%. The total amount accumulated is $11800 * (1 + 7.5/100)^2 = $14,553.75

The total amount of the loans is $3667.38 + $14553.75 = $18221.13

Now, we need to calculate Huai's monthly payment. Since there is a deferred payment period of 3 months after graduation, the total payment period is 4 years and 7 months (or 55 months). So, the monthly payment will be $18221.13/55 = $331.84