Assume that Stan takes a student loan of $5,000 at the beginningof his first year...

Assume that Stan takes a student loan of $5,000 at the beginning of his first year at Miskatonic University and graduates at the end of year 5. After graduation, a 7% interest rate on the debt is applied. If Stan makes four equal annual payments to re-pay the debt in four years after graduation, what is the IRR on his loan?

Solutions

Expert Solution

In the given situation the student has taken a loan of $5,000 and started the repayment after completion of his graduation and the interest rate is also calculated after completion of the graduation. So, the annual repayment and the interest is calculated from year 6 to year 9.

The given data are executed in excel.

IRR on his loan = 2.24%

The excel calculation are given below:

Rahul Sunny answered 2 years ago

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