I was reading an article on accrued interest as it pertains to student loans, and this is what was said:
"Say you borrow $5,000 each year you’re in school at an interest rate of 5% each year. Over four years of school and a six-month grace period, $2,937 in interest accrues."
After reading this quote, I looked for how to calculate accrued interest. How I understood it was that I should calculate the accrued interest per year and multiplied by the duration of school and the six month grace period (which is an equivalent duration of 4.5 years).
Total Accrued Interest = accrued interest per year * 4.5 years = $1109.58.
My calculated Total Accrued Interest does not match the $2937 accrued interest stated in the quote.
Can somebody please explain how the $2937 accrued interest was computed?