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A student graduates with a total loan balance of? $30,000 in asingle loan with...

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Accounting

A student graduates with a total loan balance of? $30,000 in asingle loan with monthly payments for a term of 10 years at ?7% APRinterest rate. What is the monthly payment for this? loan? Whatwill the unpaid balance be after 5? years?

Answer & Explanation Solved by verified expert
3.7 Ratings (665 Votes)

a. Monthly payment = Loan amount / Present value of annuity of 1
= $ 30,000.00 / 86.12635
= $       348.33
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.005833)^-120)/0.005833 i = 7%/12 = 0.005833
= 86.1263541 n = 10*12 = 120
b. Unpaid balance after 5 years = Monthly payment * Present value of annuity of 1
= $       348.33 * 50.50199
= $ 17,591.13
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.005833)^-60)/0.005833 i = 7%/12 = 0.005833
= 50.5019935 n = 5*12 = 60

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In: AccountingA student graduates with a total loan balance of? $30,000 in asingle loan with monthly...A student graduates with a total loan balance of? $30,000 in asingle loan with monthly payments for a term of 10 years at ?7% APRinterest rate. What is the monthly payment for this? loan? Whatwill the unpaid balance be after 5? years?

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