Which loan will have a higher balance at time of repayment

Assignment Help Financial Accounting

Reference no: EM132739802

Problem 1: Michael is graduating from college in one year, but he will need a loan in the amount of $9,056 for his last two semesters. He may either receive an unsubsidized Stafford Loan with an interest rate of 6.8%, compounded monthly, or his parents may obtain a PLUS Loan with an interest rate of 7.8%, compounded monthly. The Stafford Loan has a grace period of six months from the time of graduation. Which loan will have a higher balance at the time of repayment and by how much?

A. The PLUS Loan has a higher balance by $94.67.

B. The PLUS Loan has a higher balance by $150.59.

C. The Stafford Loan has a higher balance by $237.40.

D. The Stafford Loan has a higher balance by $334.21.

Reference no: EM132739802

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