Read the following information carefully and answer the questions given below it. Asha wants to pursue her B. Tech from Stanford University, United States, but to be able to afford it, she has to tak…

Question

Read the following information carefully and answer the questions given below it. Asha wants to pursue her B. Tech from Stanford University, United States, but to be able to afford it, she has to take an education loan. The loan agreement guaranteed to pay 80% of all her expenses. This way she only had to bear the remaining costs. As soon as she landed in the United States, she had to pay the rent for her new apartment. The apartment rent was $500 per month. She then paid her tuition fee for the current semester worth $20000. On an average she spent $300 on utilities and groceries per month. Given that, Asha's course lasted a total of two years (comprising of 2 semesters per year) and the bank gave 80% of the total expenses of two years at the beginning of her course. If the bank charges simple interest at the rate of 8% per annum, then find the total interest amount that Asha paid after 2 years. (Assume she pays off the entire loan after 2 years of completion of course) . c o

Testwala · Accepted Answer

$12697.60

Testwala · Answer

Explanation: Total expenditure on rent = 24 months × $500 = $12000 Total expenditure on utilities = 24 months × $300 = $7200 Total expenditure on tuition fees = 4 semesters × $20000 = $80000 Thus total expenditure = $(12000 + 7200 + 80000) = $99200 The bank paid 80% of this amount. ∴ Amount paid by the bank = (80/100) × 99200 = $79360 Simple Interest = (79360 × 2 × 8)/100 = $12697.60

Answer: C. $12697.60

Explanation