a)
P( 1 - (1+.09/12)^-120)/(.09/12) = 10500
P( 1 - 1.0075^-120)/.0075 = 10500
P = 133.01
b) - d) are actually bogus questions. Since you would be adding values of money that are not in the same "time spot" the result would be invalid.
The actual answer to "What is the total amount you will pay over the term of the loan?" would be " $10500 at 9% interest compounded monthly over 10 years"
but I will play the game:
133.01(120) = $15,961.15
so $5,961.15 would be interest and
$10500 would be principal
I will let you find the percentages.
Suppose you have student loans totaling $10,500 when you graduate from college. The APR is 9% and the loan term is 10 years.
a) What are your monthly payments?
b) What is the total amount you will pay over the term of the loan?
c) Of the total amount paid, what percentage is paid toward the principal?
d) Of the total amount paid, what percentage is paid for interest?
1 answer
3 answers