Question: During four years of college, Nolan MacGregor's student loans are $4000, $3500, $4400, and $5000 for freshman year through senior year, respectively. Each loan amount gathers interest of 1%, compounded quarterly, while Nolan is in school and 3%, compounded quarterly, during a 6-month grace period after graduation.
(a) What is the loan balance after the grace period? Assume the freshman year loan earns 1% interest for 3/4 year during the first year, then for 3 full years until graduation. Make similar assumptions for the loans for the other years.
(b) After the grace period, the loan is amortized over the next 10 years at 3%, compounded quarterly. Find the quarterly payment.
(c) If Nolan decides to pay an additional $90 per payment, how many payments of this size will amortize the debt?
(d) How much will Nolan save by paying the extra $90 with each payment?