Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%. What is your monthly payment to her, and how much interest will you pay her over the year (9 months)? (Fill in the blanks below and give your answers as whole numbers.) The amount of interest per month you would pay Aunt Sally is $__(1)__ . The total interest you will pay her over the year (9 months)is $__(2)__ .
|
Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%. |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
