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 t
he 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.)
1 answer:
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%
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