Question

Consider a student loan of 25000 at a fixed APR of 6% for 15 years calculate the monthly payment

Answer 1

Monthly payments of student loan 25000 at fixed APR of 6% for 15 years is 264 units of money approximately

Solution:

Given that

Amount of student loan P = 25000

APR = R = 6%

Duration = T = 15 years

First let’s calculate interest on loan.

Interest =
`(P * R * T)/(100)` =
`(25000 * 6 * 15)/(100)` = 22500

Total amount needs to pay back = Loan amount + interest = 25000 + 22500 = 47500

Duration in which amount needs to be pay back = 15 years = 15
`*` 12 = 180 months

Monthly payment = Total amount needs to pay back / duration in months

=
`(47500)/(180)`

= 263.88.

Hence monthly payments of student loan 25000 at fixed APR of 6% for 15 years is 263.888 approx 264 units of money.