A student loan for $12000 can be paid back in 10 years at 10% p.a or in 15 years at 9% per annum. What is the difference in the final amount due.

Expert Answers
justaguide eNotes educator| Certified Educator

A student loan of $12000 can be paid back either in 10 years or in 15 years. The interest rate applicable if it is paid back in 10 years is 10% per annum. The amount due after 10 years in this case is `12000*(1+10/100)^10` = 31124.9

If the loan is paid back in 15 years, an interest rate of 9% per annum is applicable. The final amount due in this case is `12000*(1 + 9/100)^15` = 43709.78

The difference in the amount that has to be paid back in the two cases is $12584.88