John has just graduated from State University. He
owes $35,000 in college loans, but he does not have a job
yet. The college loan company has agreed to give John a
break on a deferred-payment plan that works as follows.
John will not have to repay his loan for 5 years. During
this “grace period” the loan obligation will compound
at 4% per year. For the next 5 years, a monthly payment
will be required, and the interest rate will be 0.5% per
month. What will be John’s monthly payment over the
60-month repayment period?