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?
use the simple interest formula. the interest rate
must be expressed as a decimal, and the borrower
wants to pay off the principal over 8 years.

Explanation:

Step1: Calculate the amount after 4 years (during study)

The simple - interest formula is \(A = P(1+rt)\). Here, \(P=\$48000\), \(r = 0.045\) (since \(4.5\%=0.045\)), and \(t = 4\) years.

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Step2: Calculate the amount after 8 - year repayment (after study)

Now, \(P = 56640\), \(r=0.045\), \(t = 8\) years.

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Wait, there is a mistake above. Let's re - calculate correctly.

The total time of the loan is \(t=4 + 8=12\) years. Using the simple - interest formula \(A=P(1+rt)\) with \(P = 48000\), \(r=0.045\), and \(t = 12\)

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Answer:

\(\$73920\)