Question

# There are many online student loan calculators that can assist you. Examine the input boxes for one such calculator (Cost of Interest Capitalization Calculator www.finaid.org).$\begin{array}{lc} \text { Loan Balance } & 5500 \\ \text { Interest Rate } & 4.29 \\ \text { Deferment in Months } & 54 \\ \text { Capitalization } & \text { At Repayment } \\ \text { Loan Term in Years } & 10 \end{array}$After clicking "calculate" the following information is reported: Comment 1: After the deferment period of 54 months, the new loan balance is $6,561.78, including$1,061.78 in accrued interest. Comment 2: Without the interest capitalization there would have been 120 payments of $56.45 adding up to$6,774.00 (including a total of $1,274.00 in interest) plus an additional$1,061.78 in interest paid during the deferment period. Comment 3: With the interest capitalization, there are 120 payments of $67.34 for a total payment of$8,080.80 (including a total of $1,519.03 in interest plus$1,061.78 in interest accrued during the deferment period). Comment 4: The total amount paid with interest capitalization is $8,080.80, or$245.03 more than would have been paid without capitalization. That's an extra $0.04 for every dollar borrowed. Answer the questions below based on the comments above. Examine comment 2. Explain the way in which a student chose to make payments if this comment applies. Solution Verified Answered 1 year ago Answered 1 year ago Step 1 1 of 2 Observe. "Without the interest capitalization" means that the interest accrued during the deferment period is paid by the student. The monthly payment of$56.45 is computed using the original loan amount of \$5,500 (unchanged).

Answer: Interest accrued during the deferment is paid.

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