Question

You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 8% APR. You are considering making an extra payment of $200 today (that is, you will pay an extra $200 that you are not required to pay).

If you are required to continue to make payments of $500 per month until the loan is paid off, what is the amount of your final payment?

What rate of return (expressed as an APR with monthly compounding) have you earned on the $200?

Answer #1

Monthly payments required to pay off the student debt = $ 500

No of Months to be paid = 48

APR = 8%.

Amount of Student loan can be calculated in excel by PV formula,
PV(8%/12,48,500) = **$ 20480.96.**

**If** we make a $ 200 payment now, loan amount
will be reduced to 20480.96 - 200 = $ 20280.96.

And if we keep paying $ 500 PM, loan amount we would ve repaid in 47 mnths = PV(8%/12,47,500) = $ 20117.50.

Outstanding loan amount at the end of 47mnths will be 20280.96 -20117.50

= 163.46

Our final Installment will be $ 163.46 + one month interest on
163.46 = 163.46 + (163.46* 8%/12) = 163.46+1.09 =**$
164.55**

**$** 200 payment now have resulted in (500-164.55)
= $ 335.45 less payment in 48mnths time.

Interest Earned = 335.45 -200 = 135.45,

Rate of return compounded monthly = as the payment is made against a loan which is charging 8%, it is safe to assume, we have earned 8%

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 8.25% APR. You are considering making an extra payment of
$175 today (that is, you will pay an extra $175 that you are not
required to pay).
a. If you are required to continue to make payments of $600 per
month until the loan is paid off, what is the amount of your final
payment? ...

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 9.25% APR. You are considering making an extra payment of
$150 today (that is, you will pay an extra $150 that you are not
required to pay).
a. If you are required to continue to make payments of $600 per
month until the loan is paid off, what is the amount of your
final payment? ...

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 9.25% APR? (compounded monthly). You are considering making
an extra payment of $ $150 today? (that is, you will pay an extra
$150 that you are not required to? pay).???(Note: Be careful not to
round any intermediate steps to fewer than six decimal?
places.)
a. If you are required to continue to make payments of...

You have an outstanding student loan with required payments of
$500 per month for the next four years. The interest rate on the
loan is 8% APR (compounded monthly). Now that you realize your
best investment is to prepay your student loan, you decide to
prepay as much as you can each month. Looking at your budget, you
can afford to pay an extra $175 a month in addition to your
required monthly payments of $500, or $675 in total...

You have an outstanding student loan with required payments of $
500 per month for the next four years. The interest rate on the
loan is 8%APR (compounded monthly). Now that you realize your best
investment is to prepay your student loan, you decide to prepay as
much as you can each month. Looking at your budget, you can afford
to pay an extra $ 250 a month in addition to your required monthly
payments of$ 500 ,or $750 in...

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 8% APR (monthly). Now that you realize your best
investment is to prepay your student loan, you decide to prepay as
much as you can each month. Looking at your budget, you can afford
to pay an extra $250 a month in addition to your required monthly
payments of $600 or $850 in total each...

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 8% APR (compounded monthly). Now that you realize your
best investment is to prepay your student loan, you decide to
prepay as much as you can each month. Looking at your budget, you
can afford to pay an extra $175 a month in addition to your
required monthly payments of $600, or $775 in total...

You have an outstanding student loan with required payments of
$550 per month for the next four years. The interest rate on the
loan is 8% APR (compounded monthly). Now that you realize your best
investment is to prepay your student loan, you decide to prepay as
much as you can each month. Looking at your budget, you can afford
to pay an extra $250 a month in addition to your required monthly
payments of $550 , or $800 in...

You have an outstanding student loan with required payments of $
600
per month for the next four years. The interest rate on the loan
is
10 %
APR (compounded monthly). Now that you realize your best
investment is to prepay your student loan, you decide to prepay as
much as you can each month. Looking at your budget, you can afford
to pay an extra
$ 250
a month in addition to your required monthly payments of
$ 600...

You have an outstanding student loan with required payments of
$600 per month for the next four years. The interest rate on the
loan is 10% APR (compounded monthly). Now that you realize your
best investment is to prepay your student loan, you decide to
prepay as much as you can each month. Looking at your budget, you
can afford to pay an extra $250 a month in addition to your
required monthly payments of $600, or $850 in total...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 2 minutes ago

asked 2 minutes ago

asked 3 minutes ago

asked 4 minutes ago

asked 4 minutes ago

asked 19 minutes ago

asked 38 minutes ago

asked 40 minutes ago

asked 52 minutes ago

asked 1 hour ago

asked 1 hour ago