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Ursula took out an unsubsidized Stafford loan to help pay for her first of her four years at college. The loan had a principal of $6,400, an interest rate of 6. 9% compounded monthly. After college, Ursula started making monthly payments over a 10 year period on her loan. What percentage of the total cost of the loan is the finance charge? a. 45. 25% b. 27. 91% c. 43. 50% d. 82. 66%.

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chilljain33

The correct statement is that Ursula has incurred the finance charge of 46.17% about for the loan amounting to $6400. So, the correct option matching the statement is not as quoted in the options above.

Finance charge can be calculated by summarizing and comparing the principal amount with the annuity amount derived by the formula of compound interest.

Compound Interest

  • Finance charge is the additional cost of capital borne by the person to avail the credit facility from the creditor and repayable at the end of a predetermined period at a fixed rate of interest.

  • The calculation of compound interest in the essence of information given below will be as,

  • [tex]\rm Compounded\ Annuity= 6400(1+\dfrac{0.069}{12})^1^2^\ x\ ^9\ \\\\\\\\\rm Compounded\ Annuity= 6400(1.00575)^1^0^8[/tex]

  • Continuing further,

  • [tex]\rm Compounded\ Annuity = \$11887.88[/tex]

  • With the value of compounded annuity we get the interest as $5887.88

  • The cost of percentage of finance charge can be calculated as,

  • [tex]\rm Finance\ charge= \dfrac{Annuity}{number\ of\ monthly\ payments}\\\\\\\rm Finance\ charge= \dfrac{11887.88}{120}\\\\\\\rm Finance\ charge=99.06[/tex]

Hence, the correct option is that Ursula has borne the financial charge as 46.17% of her principal.

To know more about finance charge, click the link below.

https://brainly.com/question/298229

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