Question

A student borrows $90,000 for business school at 9.0% stated annual interest with equal monthly payments over 9 years. Consider this as a loan with no payments or interest during school so that the problem structure is equivalent to a standard loan received one period before the first payment. How much is the monthly payment

Answer 1

the monthly payment is $1,218.86

Step-by-step explanation:

The computation of the monthly payment is shown below;

Given that

RATE = 9% ÷ 12 = 0.75%

NPER = 9 × 12 = 108

PV = -$90,000

FV = $0

The formula is shown below;

=PMT(RATE,NPER,PV,FV,TYPE)

After applying the above formula, the monthly payment is $1,218.86