Loan Project

Government Subsidized and Unsubsidized loans both have an interest rate of 3.86%. Subsidized loans don't start adding the interest until the student has graduated, as an unsubsidized loan does add interest after the first day of the loan.

The purpose of this project was to find the total amount of money I would actually be paying back towards the loans. I will be taking $5000 every year. The equation being used will be A=P(1+r)^t
The rate is 2.99% , Principle = 5000 , t = time (years) I plan to pay everything back in 10 years.



$5,000                    A=5000(1+.0299)^4             -------->     $ 5,625.36

                                                                                            +

$5,000                    A=5000(1+.0299)^3             -------->     $ 5,462.04

                                                                                            +

$5,000                    A=5000(1+.0299)^2             -------->     $5,303.47

                                                                                            +

$5,000                    A=5000(1+.0299)^1             -------->     $5,149.50  
_________________________________________________________

                                                                                      $21,540.37

$21540.37               A=21540.37(1+.0299)^10    --------->     $28,920.36

$28920.36 is the total amount of money I actually have to pay back from the $20,000 I was loaned.

There are 120 months in 10 years, so you divide $28,920.36 by 120 to find how much money you must pay a month.

$28,920.36 / 120 = $241

I will be paying $241 a month for 10 years to pay back the loan I took for college.