1. Consider a student loan of $17,500 at a fixed APR of 12 % for 20 years. What is the monthly payment?

2. Consider a student loan of $25,000 at a fixed APR of 6 % for 15 years. What is the monthly payment?

3. Consider a home mortgage of $225,000 at a fixed APR of 4.5 % for 20 years. What is the monthly payment?

4. Consider a home mortgage of $225,000 at a fixed APR of 6 % for 30 years. What is the monthly payment?

5. Suppose that on January 1 you have a balance of $3000 on a credit card whose APR is 21 %, which you want to pay off in 1 year. Assume that you make no additional charges to the card after January 1. Calculate monthly payment

6. Suppose that on January 1 you have a balance of $4500 on a credit card whose APR is 17 %, which you want to pay off in 3 years. Assume that you make no additional charges to the card after January 1. Calculate monthly payment

Question

Mathematics

Quinn Chen

1 November, 00:10

1. Consider a student loan of $17,500 at a fixed APR of 12 % for 20 years. What is the monthly payment?

2. Consider a student loan of $25,000 at a fixed APR of 6 % for 15 years. What is the monthly payment?

3. Consider a home mortgage of $225,000 at a fixed APR of 4.5 % for 20 years. What is the monthly payment?

4. Consider a home mortgage of $225,000 at a fixed APR of 6 % for 30 years. What is the monthly payment?

5. Suppose that on January 1 you have a balance of $3000 on a credit card whose APR is 21 %, which you want to pay off in 1 year. Assume that you make no additional charges to the card after January 1. Calculate monthly payment

6. Suppose that on January 1 you have a balance of $4500 on a credit card whose APR is 17 %, which you want to pay off in 3 years. Assume that you make no additional charges to the card after January 1. Calculate monthly payment

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Answers (1)

Know the Answer?

Keith · Answer 1

A) p = Pr/[1 - (1+i) ^-n]

Assuming the interest compounds monthly

p = 175000 (.01) / [1 - 1 / (1.01) ^240] = $1926.90

b) 240*1926.90 = $462,456

c) 175000/462456 = 37.84% is paid to principal and 100-37.84 = 62.16% is paid to interest.