Question 2 • SEPHS - BUS 240 - Personal Finance (Summer)
Because the loans are subsidized, no interest accrues while Toby is in school, so each loan’s balance at graduation is $6,125. For each 10-year loan, use the monthly rate 0.053 ÷ 12 and 120 payments in the loan-payment formula; the total of those payments is $7,904.04 per loan. Thus, 4 × $7,904.04 = $31,616.16, so the total lifetime cost is choice b, $31,616.16.
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