Question

Consider a student loan of ​$20,000 at a fixed APR of 12​% for 15 years. a. Calculate the monthly payment.​(Do not round until the final answer. Then round to the nearest cent as​ needed.) b. Determine the total amount paid over the term of the loan. ​(Round to the nearest cent as​ needed.) c. Of the total amount​ paid, what percentage is paid toward the principal and what percentage is paid for interest. ​(Round to the nearest tenth as​ needed.)

Answer 1

Answer:

a. $240.03

b. $43,205.04

c. Principal = 46.29%

   Interest = 53.71%

Step-by-step explanation:

The computation is shown below:

a. For computing the monthly payment we need to apply the PMT formula i.e to be shown in the attachment below

Given that,  

Present value = $25,000

Future value or Face value = 0

RATE = 12% ÷ 12 months = 1%

NPER = 15 years × 12 months = 180 months

The formula is shown below:  

= PMT(RATE;NPER;-PV;FV;type)  

The present value come in negative  

So, after applying the above formula the monthly payment is $240.03

b. Now the total amount paid is

= Monthly payment × time period

= $240.03 × 180 months

= $43,205.04

c. Now the percentage is

For principal

= $25,000 ÷ $43,205.04 × 100

= 46.29%

And, for the interest, it is

= 100% - 46.29%

= 53.71%