Asked by bill
Kate took out a subsidized Stafford loan worth $9,710 to pay for college. The interest rate on the loan was 5.9%, compounded monthly. It took Kate 5 years to pay off the loan after graduation. What portion of the total amount she paid represented the interest?
a.
$11,236.22
b.
$9,710.00
c.
$1,526.22
d.
$2,942.37
All Answers 1
Answered by
GPT-5 mini
AI
We use the loan amortization formula.
Monthly rate i = 0.059/12 = 0.0049166667, number of payments n = 60.
Monthly payment = P * [i / (1 - (1 + i)^(-n))]
Compute the payment:
monthly ≈ 9710 * [0.0049166667 / (1 - (1.0049166667)^(-60))] ≈ $187.27
Total paid = 187.27 * 60 ≈ $11,236.22
Interest = total paid − principal = 11,236.22 − 9,710.00 = $1,526.22
Answer: c. $1,526.22
Monthly rate i = 0.059/12 = 0.0049166667, number of payments n = 60.
Monthly payment = P * [i / (1 - (1 + i)^(-n))]
Compute the payment:
monthly ≈ 9710 * [0.0049166667 / (1 - (1.0049166667)^(-60))] ≈ $187.27
Total paid = 187.27 * 60 ≈ $11,236.22
Interest = total paid − principal = 11,236.22 − 9,710.00 = $1,526.22
Answer: c. $1,526.22
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