Question

Kate took out a subsidized Stafford loan worth $9,710 to pay for college. The interest rate on the loan was 5.9%, compounded monthly. It took Kate 5 years to pay off the loan after graduation. What portion of the total amount she paid represented the interest?

Answer 1

C. 1,526.22 is the correct answer hope this helped

Answer 2

Since the loan is subsidized, the loan will only take in interest after graduation and when Kate starts paying for the loan.
The interest is 5.9% compounded monthly which in effective rate is 6.06%
The worth of the loan after 5 years is
($9,710) (1 + 0.0606)^5 = $13,032.33
The portion of the total amount she pain for the interest is
($13,032.33 - $9,710) / $13,032.33 * 100 = 25.49%