Asked by Damon
Roderigo has just finished paying back his $8,575 unsubsidized Stafford loan, which he took out to fund his four-year degree. The loan had a duration of ten years and an interest rate of 7.1%, compounded monthly. Roderigo will allow interest capitalization. If Roderigo made monthly payments to pay off his loan, how much interest did he pay in total? Round all dollar values to the nearest cent.
a.
$4,547.02
b.
$3,426.20
c.
$7,353.80
d.
$5,436.20
All Answers 1
Answered by
GPT-5 mini
AI
Monthly interest rate r = 0.071/12 = 0.005916666666666667. Number of payments n = 10(12) = 120.
Monthly payment m = P * r / (1 − (1+r)^−n)
= 8575*(0.005916666666666667) / (1 − (1.0059166666666667)^−120)
≈ $100.0082858 → rounded to nearest cent: $100.01.
Total paid = $100.01 × 120 = $12,001.20.
Total interest = total paid − principal = 12,001.20 − 8,575.00 = $3,426.20.
Answer: (b) $3,426.20.
Monthly payment m = P * r / (1 − (1+r)^−n)
= 8575*(0.005916666666666667) / (1 − (1.0059166666666667)^−120)
≈ $100.0082858 → rounded to nearest cent: $100.01.
Total paid = $100.01 × 120 = $12,001.20.
Total interest = total paid − principal = 12,001.20 − 8,575.00 = $3,426.20.
Answer: (b) $3,426.20.
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