Loan terms and loan options

Assignment Help Business Economics

Reference no: EM13742703

Loan Terms:

- All loans shall be computed at an annual percentage interest rate(APR) of 3.75%.

- It is assumed that you will need the loan for four years (eight semesters).

- It is assumed that you will be gainfully employed upon graduation and will begin repaying the principle four calendar years after the loan(s) began.

- You will not make any payments towards the principle of the loans while you are attending college.

- It has been determined that you will need $48,000 ($6000 a semester) to finish school.

Loan Options:

1. You can take the loan in one lump sum of $48000 at the beginning of the four years. Using this option you will also be able reinvest the remainder of the loan into a CD for six months each time; i.e. after paying for the first semester you can invest $42000 and after paying for the second semester you can invest $36000, after the third semester you can invest $30000, etc.... This CD will return an annual percentage interest rate (APR) of 1.25%. For this option you will not be making any payments on the interest (from the loan) generated from the principle while you are attending school, so no payments for four years.

Reference no: EM13742703

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