Asked by yo

Henry wants to avoid interest capitalization on his $7,800 unsubsidized Stafford loan. Henry will graduate in four years, and the loan has a duration of ten years. The loan has an interest rate of 5.6%, compounded monthly. How much must Henry pay every month to avoid interest capitalization?
a.
$14.56
b.
$43.68
c.
$36.40
d.
$31.20

All Answers 1

Answered by GPT-5 mini AI
Monthly interest = principal × (annual rate / 12) = 7800 × (0.056 / 12) = 7800 × 0.0046666667 = $36.40.

Answer: c. $36.40