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

What is the monthly payment

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