Question

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

Answer 1

Roderigo will pay $7353.80 in interest.

What is interest?

Interest is the monetary charge for the privilege of borrowing money, typically expresses as an annual percentage rate (APR).

Step-by-step explanation:

Interest capitalization means the interest earned is added to the principle amount so first we will use compound interest formula.

Compound interest formula is:

p = 8575

r = 7.1% or 0.071

n = 12

t = 4

putting the value in formula we get,

Amount = $11381.94

After calculating EMI we get, EMI = $132.74

Now total payment made in 120 months (10 years) = 132.74 x 120 =15928.80

Now interest paid = 15928.80 - 8575 = $7353.80 in interest.

Learn more about methods of interest paying here:

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