Tamora has just graduated from college. When she entered college four years ago, she took out a $9,100 subsidized Stafford loan, which has a duration of ten years. The loan has an interest rate of 5.4%, compounded monthly. If Tamora makes monthly payments, how much interest will she have paid in total by the time the loan is paid off? Round all dollar values to the nearest cent.

After ten years, Tamora will have spent $6.496.76 on interest.

What is Compound interest?

Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.

Given, Tamora has just graduated from college. When she entered college four years ago, she took out a $9,100 subsidized Stafford loan, which has a duration of ten years. The loan has an interest rate of 5.4%, compounded monthly.

The total amount of interest to be paid can be expressed as;

A={P}

where;

A = Total amount of interest

P = principal amount of the loan

r = annual interest rate

n = number of compounding periods in a year

t=number of years

In our case;

P=$9,100

r=5.4%=5.4/100=0.054

n=12

t=10 years

Replace the values and solve

A=9,100{(1+0.054/12)^(12×10)}-9,100

A=9,100{(1.0045)^120}-9,100

A=6,496.7575

The sum has been rounded to the closest penny. The equivalent of rounding to the nearest decimalplace is 1/100=0.01.

A=$6,496.76

Tamora will have paid $6.496.76 in interest overall after ten years.

Learn more about compound interest here:

brainly.com/question/14295570

#SPJ3

Answer:

The total interest amount that Tamora will have paid in 10 years=$6.496.76

Step-by-step explanation:

Step 1: Express the formula for calculating total amount of interest

The total amount of interest to be paid can be expressed as;

A={P(1+r/n)^nt}-P

where;

A=total amount of interest

P=principal amount of loan

r=annual interest rate

n=number of compounding periods in a year

t=number of years

In our case;

P=$9,100

r=5.4%=5.4/100=0.054

n=12

t=10 years

Step 2: Replace the values and solve

A=9,100{(1+0.054/12)^(12×10)}-9,100

A=9,100{(1.0045)^120}-9,100

A=6,496.757596

The amount rounded off to nearest cent 1/100=0.01 is the same as rounding off to nearest  decimal places

A=$6.496.76

The total interest amount that Tamora will have paid in 10 years=$6.496.76