Question

Consider a student loan of 20,000 at a fixed APR of 6% for 20 years calculate monthly payments

Answer 1

143.29

Explanation:

20,000 for 20 yr at 6% intrest

240 total payments with total intrest of 14,388.69

payback amount 34,388.69

Answer 2

The monthly payments for student loan of 20,000 is $183.34.

SOLUTION:

Given, a student loan of 20,000 at a fixed APR of 6% for 20 years

We need to calculate monthly payments.

Now, we need to follow the below procedure to calculate monthly payments.

Convert the annual rate from percentage to decimal format (by dividing by 100)

`(6)/(100)` = 0.06 annually

Now, Divide the annual rate by 12

`(0.06)/(12)` = 0.005

Then, Calculate the monthly interest on $20,000

`0.005 * 20000` = 100

Now, loan amount to be paid per month is total amount divided by time span

`$(20000)/(20 * 12) = 183.34$`

Hence, the monthly payments are $183.34.