Question

the simple interest formula is $a = p(1 + rt)$.
over the course of four years, a student borrows $48,000 to pay their tuition. the loan has an annual interest rate of 4.5% with deferred interest, meaning interest on the principal does not begin accruing until the student graduates. after graduation, the student plans to pay off the loan in 8 years.
how much will they pay in total over the life of the loan?
$56,640
$73,920
$65,280
$69,600

Explanation:

Step1: Calculate the total time

The loan has a deferment period of 4 years (during study) and a repayment period of 8 years. So the total time \( t=4 + 8=12\) years.

Step2: Identify the principal and rate

The principal \( P = 48000\), and the annual interest rate \( r=0.045\) (since \(4.5\%=\frac{4.5}{100}=0.045\)).

Step3: Use the simple - interest formula

The simple - interest formula is \(A = P(1+rt)\). Substitute \(P = 48000\), \(r = 0.045\), and \(t = 12\) into the formula:

$$
LATEXBLOCK0
$$

Answer:

\(73920\)