Question

You have accumulated $85,000 in student loans that average 5% interest. You graduate next month and will be paying off the loans over 10 years. Which of the following is most likely to be your monthly payment assuming you pay interest and a portion of the principal each month?

Answer 1

pmt = pv * (r/n) / (1 - (1+r/n)^(-n*t))
pmt = 85000 * (.05/12) / (1 - (1+.05/12)^(-12*10)) = $901.56

Best answer is B.$900