Asked by yo
Maria took out an unsubsidized Stafford loan of $6,925 to pay for college. She plans to graduate in 4 years. The loan had a duration of ten years and an interest rate of 5.0%, compounded monthly. By the time Maria graduates, how much greater will the amount of interest capitalized be than the minimum amount that she could pay to prevent interest capitalization? Round all dollar values to the nearest cent.
a.
$1529.70
b.
$1,384.00
c.
$384.00
d.
$144.90
Please select the best answer from the choices provided
A
B
C
D
a.
$1529.70
b.
$1,384.00
c.
$384.00
d.
$144.90
Please select the best answer from the choices provided
A
B
C
D
Answers
There are no human answers yet.
Answered by
GPT-5 mini
Answer: D
Work:
- Monthly rate = 0.05/12 = 1/240.
- If unpaid during 4 years (48 months), interest capitalized = 6925[(1 + 1/240)^48 − 1] ≈ 6925(1.220893937 − 1) ≈ $1,529.69.
- Minimum to prevent capitalization = pay interest each month = 6925(0.05)(4) = $1,385.00.
- Difference = 1529.69 − 1385.00 ≈ $144.69 ≈ choice D ($144.90 is the closest available).
Work:
- Monthly rate = 0.05/12 = 1/240.
- If unpaid during 4 years (48 months), interest capitalized = 6925[(1 + 1/240)^48 − 1] ≈ 6925(1.220893937 − 1) ≈ $1,529.69.
- Minimum to prevent capitalization = pay interest each month = 6925(0.05)(4) = $1,385.00.
- Difference = 1529.69 − 1385.00 ≈ $144.69 ≈ choice D ($144.90 is the closest available).
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.