A student loan is taken out for $7,500 at 7.3%. The student graduates 2 years and 3 months after the
Loan is acquired. Payments are deferred for 3 months after graduation. Find the total amount of
Interest that will accrue before regular payments begin, using 30-day months.

Question

Quizplus · Accepted Answer

Step 1: Calculate the interest rate per month: 
7.3% / 12 = 0.6083% per month

Step 2: Calculate the number of months from when the loan is acquired to when payments begin:
2 years and 3 months + 3 months deferred = 27 months

Step 3: Calculate the interest accrued during the deferred period (3 months):
$7,500 x 0.6083% x 3 months = $136.76

Step 4: Calculate the interest accrued during the period from when the loan is acquired to when payments begin (27 months):
$7,500 x 0.6083% x 27 months = $1,213.24

Step 5: Add the interest accrued during the deferred period to the interest accrued before payments begin:
$136.76 + $1,213.24 = $1,350.00

Therefore, the total amount of interest that will accrue before regular payments begin is $1,350.00. The best choice is D.

A Student Loan Is Taken Out for $7,500 at 7