Question

You estimate that you will owe $40,200 in student loans by the time you graduate. If you want to have this debt paid in full within 10 years, how much must you pay each month if the interest rate is 4.35 percent, compounded monthly

Answer 1

Answer:

$413.73

Explanation:

The amount that i will pay per month for the period of 10 years in order to paid the debt of the $40,200 shall be determined through the present value of annuity formula which is given as follows:

Amount borrowed by me=present value of annuity=R[(1-(1+i)^-n)/i}

In the given question

Amount borrowed by me=present value of annuity=$40,200

R=amount to be paid per month

i=interest rate compounded monthly=4.35/12=0.3625%

n=number of payments involved=10*12=120

Amount borrowed by me=present value of annuity=R[(1-(1+i)^-n)/i]

$40,200=R[(1-(1+0.3625%)^-120)/0.3625%]

R=$413.73