Question

Assume you graduate from college with ​$26 comma 000 in student loans. If your interest rate is fixed at 4.70​% APR with monthly compounding and you repay the loans over a 10​-year ​period, what will be your monthly​ payment?

Answer 1

$271.97

Step-by-step explanation:

For this question we use the PMT i.e monthly payment that is presented on the attached spreadsheet. Kindly find it below:

Data provided in the question

Given that,

Present value = $30,000

Future value = $0

Rate of interest = 4.70% ÷ 12 months = 0.391666%

NPER = 10 years × 12 months = 120 months

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $271.97