Answer:
The principal amount be when he must begin repaying his loan is $22383.911.
Step-by-step explanation:
Given : Upon graduation from college, Warren Roberge was able to defer payment on his $22,000 student loan for 3 months. If the interest is 6.94 % compounded monthly.
To find : What will the principal amount be when he must begin repaying his loan?
Solution :
Using compound interest formula,
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
Where,
A is the amount
P is the principal P=$22,000
r is the rate r=6.94%=0.0694
t is the time t=3 months
Into years, [tex]t=\frac{3}{12}=\frac{1}{4}[/tex]
n is the number of period n=12
Substitute the value in the formula,
[tex]A=22000(1+\frac{0.0694}{12})^{12\times \frac{1}{4}}[/tex]
[tex]A=22000(1+0.005783)^{3}[/tex]
[tex]A=22000(1.005783)^{3}[/tex]
[tex]A=22000(1.01745)[/tex]
[tex]A=22383.911[/tex]
The principal amount be when he must begin repaying his loan is $22383.911.
