Question

5. Assume borrow $75,000 for college and have to pay back the loan monthly for 10...

5. Assume borrow $75,000 for college and have to pay back the loan monthly for 10 years after graduation. If the rate is 6%, what is the amount of your monthly loan payment?

Homework Answers

Answer #1
Amount of monthly loan payment = Loan amount/Present value of annuity of 1
= $       75,000 /    90.0735
= $       832.65
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.005)^-120)/0.005 i 6%/12 = 0.005
=         90.0735 n 10*12 = 120
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