Bianca took out a $2,600 unsubsidized stafford loan. she will be attending school for four years, and she wishes to have the loan paid off five years before its normal ten-year duration is finished. the loan has an interest rate of 6.2%, compounded monthly. how much will she have to pay monthly to avoid interest capitalization? a.) $12.40 b.) $19.29 c.) $13.43 d.) $17.36

She can pay just the interest every month and let the capital stagnant at $2600, and worry about it when she finishes school (and pay in 5 years, perhaps).

The amount to avoid capitalization of interest 
A=P(i)=2600*(0.062/12)=13.43 (to the nearest cent)

After 4 years, she will be paying 50.51 a month to repay the loan in the next 5 years.
Monthly Amount,A, for 5 years after Stanford




If she repays every month over the 9 years, then she would have to pay


= 31.47 per month for 9 years.

If she does not pay anything during the four years, she will owe, after four years, 
P=2600(1+0.062/12)^(4*12)
=3329.67
And the monthly amount, A, for the following 5 years would be


=64.68