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12 March, 03:07

Consider a student loan of 17,500 at a fixed Apr of 9% for 20 years

What is the monthly payment

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  1. 12 March, 03:36
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    Monthly payment=408.65

    Step-by-step explanation:

    The total amount on the student loan can be expressed as;

    A=P (1+r/n) ^nt

    where;

    A=Total amount

    P=Principal loan amount

    r=Annual interest rate

    n=number of times the interest is applied per unit time

    t=number of periods

    In our case;

    P=17,500

    r=9/100=0.09

    n=1

    t=20 years

    Replacing;

    A=17,500 (1+0.09) ^20

    A=17,500*1.09^20

    A=98,077.19

    Total amount to be paid in 20 years=98,077.19

    Yearly amount to be paid=Total amount/Number of years

    Yearly amount to be paid = (98,077.19/20) = 4,903.86

    Monthly amount to be paid=Yearly amount paid/Number of months in a year

    Monthly amount to be paid = (4,903.86/12) = 408.65

    Monthly payment=408.65
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