On September 12, Claire had $8,000 in student loans outstanding. She agreed to $125 per month payments to repay these loans. From September 12 to October 8, the interest rates were 5.0%, but decreased to 4.5% thereafter. Calculate the balance outstanding on October 31.
A) $7,800.76
B) $7,808.96
C) $7,819.27
D) $7,826.34
E) $7,855.68

Question

Quizplus · Accepted Answer

The correct answer is A.The interest for the first 26 days (September 12 to October 8) is $8,000 * 5.0% * 26/365 = $35.62. The remaining balance is $8,000 - $35.62 = $7,964.38. The interest for the next 23 days (October 9 to October 31) is $7,964.38 * 4.5% * 23/365 = $23.90. The remaining balance is $7,964.38 - $23.90 = $7,800.76.

On September 12, Claire Had $8,000 in Student Loans Outstanding