Question

Consider a student loan of ​$22 comma 500

Answer 1

Answer:

a. $231.44

b. $83,318.40

c. Principal=27%

   Interest=73%

Step-by-step explanation:

a.#The starting loan principal = $22,500; the interest rate = 12%; there are 12 payments per year; the loan term = 30 years;the monthly payment is calculated as;

$PMT=\frac{p(APR/n)}{1-(1+\frac{APR}{n})^{-nY}}\\\\=\frac{22500\times \frac{0.12}{12}}{1-(1+\frac{0.12}{12})^{-12\times30}}\\\\=231.44$

Hence , the monthly payment is $231.44

b. The total amount paid over the loan's term is calculated using the formula:

$A=PMT\times m\times n$

m-number of months in a year,

n-number of years

PM-monthly payments.

$A=PMT\times m\times n\\\\=231.44\times 12\times 30\\\\=83318.40$

Hence, the total amount paid over the term of the loan is $83,318.40

c. We then calculate the interest and principal as a % of total loan repayments:

$Principal=\frac{P}{A}\\\\=\frac{22,500}{83318.40}\\\\=27\%\\\\Interest=100\%-27\%\\\\=73\%$

Hence, principal portion is 27% and the interest portion is 73%