Question

If I borrow $80,000 in loans for college and have to pay back the loan every month for 15 years after graduation. If the rate is 8%, what is the amount of my monthly loan payment?

Please explain to me how I would enter this information on Excel and how I can solve it. Thank you!

Answer 1

Amount of monthly loan payment

=

Loan amount/Present value of annuity of 1

=

$       80,000

/

104.6381

=

$       764.54

Working:

Present value of annuity of 1

=

(1-(1+i)^-n)/i

Where,

=

(1-(1+0.006667)^-180)/0.006667

i

8%/12

=

0.006667

=

104.6381

n

15*12

=

180