Michael is graduating from college in one year, but he will need a loan in the amount of $9,056 for his last two semesters. He may either receive an unsubsidized Stafford Loan with an interest rate of 6.8%, compounded monthly, or his parents may obtain a PLUS Loan with an interest rate of 7.8%, compounded monthly. The Stafford Loan has a grace period of six months from the time of graduation. Which loan will have a higher balance at the time of repayment and by how much?

Question

anonymous · Answer

The PLUS Loan has a higher balance by $94.67.

 The PLUS Loan has a higher balance by $150.59.

 The Stafford Loan has a higher balance by $237.40.

 The Stafford Loan has a higher balance by $334.21.

anonymous · Answer

$$A=P\left(1+{r\over100k}\right)^{nk}$$

anonymous · Answer

for STAFFORD:
P=9056
r=6.8
k=12
n=1.5

for PLUS:
P=9056
r=7.8
k=12
n=1

anonymous · Answer

got it :)