Applications-of-Simple-Interest-Canada-student-loa.ppt

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1、Chapter 7 Applications of Simple Interest7.5 Canada student loans 1Federal governments Canada Student Loan Program(CSLP)1,no interest is charged on Canada Student Loan as long as you retain student status under the CSLP;2,six month after you cease to be a student,you begin to make monthly loan payme

2、nt.The six month is called grace period.You can pay interest for the grace period at the end of grace period or convert it to principal.And interest rate will be prime+2.5%.23,before the end of the grace period,you consolidate all Canada Student Loan into a single loan.The first payment of the singl

3、e loan will be made 1 month the end of the grace period.For example,the final examination end on May 7 and you dont return to college the following September.You have 6-month grace period from June 1 to Nov 30.The first payment of the consolidated loan must be made Dec 31.34,you have several options

4、:1)Floating interest rate:prime+2.5%2)Fixed interest rate:the prime rate at the time of consolidation+5%.3)Choose the fixed monthly payment subject to a maximum term of 114 months.4)5,interest is calculated on each days balance.5)6,the repayment schedule can be construct as the same way as the deman

5、d loan.4Solution:Calculate the accrued interest for the grace period.(June 1 to Nov 30)June 1 to August 3:Interest rate=7.25%+2.5%=9.75%paThe number of days=63days6August 3 to Nov 30:Interest rate=7.5%+2.5%=10%paThe number of days=120days(count the last day)The accrued interest=$89.19+$174.25=$263.447The principal of the consolidated loan=$5300+$263.44=$5563.44 8