Question

Simon took out an unsubsidized student loan of $43,000 at a 2.4% APR,

compounded monthly, to pay for his last six semesters of college. If he will
begin paying off the loan in 33 months with monthly payments lasting for 20
years, what will be the amount of his monthly payment?

Answer 1

$241.16

Explanation:

took the test rn

Answer 2

$289.41

Explanation:

As we know that the total amount 'A' that is due to pay on loan for a certain interest 'r', principal 'p' and number of times the interest is compounded per year 'n' is:

`A = p (1+(r)/(n))^(nt)`

Since, in our case, p = $43,000, r = 2.4% =
`(2.4)/(100)` = 0.024, n = 12 (monthly), and t = 20 years.

Therefore,

`A = 43000 (1+(0.024)/(12))^((12)(20))`

`A = 69457.89$` $

For monthly payment for 20 years,

`A = (69457.89)/((12)(20))`

`A = 289.407`$ ≈ $289.41

Hence, the amount of his monthly payment lasting for 20 years at APR of 2.4% on a loan of $43,000 compounded monthly will be $289.41.