Mona takes out a $12,000 student loan to help pay for her first 2 years of college, then 2 years later needs another loan for $14,000 to get her through to graduation. She graduates 4 years and 9 months after acquiring the first loan, and payments are deferred until 6 months after graduation. The interest rate on both loans is 6.8%
Find the total amount of interest that will accrue until payments begin.
To find the total amount of interest that will accrue until payments begin, we need to calculate the interest accrued on each loan separately and then sum them together.
First, let's calculate the interest accrued on the first loan of $12,000. The interest rate is 6.8% per year, and the period is 4 years and 9 months (which is 4.75 years). Using the formula:
Interest = Principal * Rate * Time
Interest = $12,000 * 0.068 * 4.75
Interest on the first loan = $3,066
Now, let's calculate the interest accrued on the second loan of $14,000. The interest rate and period are the same as the first loan, so we can use the same formula:
Interest on the second loan = $14,000 * 0.068 * 4.75
Interest on the second loan = $3,626
Finally, let's sum the interest accrued on both loans:
Total interest = Interest on the first loan + Interest on the second loan
Total interest = $3,066 + $3,626
Total interest = $6,692
Therefore, the total amount of interest that will accrue until payments begin is $6,692.
To find the total amount of interest that will accrue until payments begin, we need to calculate the interest for each loan separately and then add them together.
First, let's calculate the interest for the initial loan of $12,000 over a period of 4 years and 9 months (or 4.75 years). The interest rate is 6.8% per year.
Interest on the initial loan = Principal * Rate * Time
Interest on the initial loan = $12,000 * 0.068 * 4.75
Next, let's calculate the interest for the second loan of $14,000 over a period of 6 months (0.5 years). The interest rate is 6.8% per year.
Interest on the second loan = Principal * Rate * Time
Interest on the second loan = $14,000 * 0.068 * 0.5
Finally, we can find the total amount of interest that will accrue until payments begin by adding the two calculated interest amounts together.
Total interest = Interest on the initial loan + Interest on the second loan
Simplifying the above expression will give you the final answer.