Question

Angelica Reardon received a 5-year non-subsidized student loan of $15,000 at an annual interest rate of 6.7%. What are Angelica's monthly loan payments for this loan after she graduates in 4 years? (Round your answer to the nearest cent.)

Answer 1

SOLUTION:

From given data,

Angelica Reardon received a 5-year non-subsidized student loan of $15,000 at an annual interest rate of 6.7%. What are Angelica's monthly loan payments for this loan after she graduates in 4 years? (Round your answer to the nearest cent.)

P = $15000

r = 6.7% = 0.067

t = 4

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

= 15000 (1+0.067/1)^1*4   

   = 15000 (1+0.067)⁴

= 19442.36

Amount = $ 19442.36

Now calculate monthly loan payments for this loan after graduation

N = 12 months

R = r / N = 0.067 / 12 = 0.00558

Equated Monthly Installment = [Amount *R*(1+R)^N] / [(1+R)^N -1]

  = [19442.36*0.00558*(1+0.00558)¹²] / [(1+0.00558)¹² -1]

  = [19442.36*0.00558*1.069053709] / [1.069053709 -1]

= 115.97989305 / 0.069053709

   = 1679.5606

= $1679.56

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