Question

If you attended Mt. IveySchmivey—with a 4 year tuition of $125,000—and paid a monthly loan payment of $562 (roughly 15% of your $45,000 salary as a social worker), how long would it take you to pay off a student loan at a 5% interest rate?

Answer 1

It will 19.5 years.

Tuition=$125,000
Interest rate= 5%
5% of $125,000 = $6,250
$125,000 + $6,250 = $131,250
$131,250/$562(monthly payment) = 233.540925
233.540925/12(months in a year) = 19.4617438
round up and it 19.5 years

Answer 2

Use the formula of the present value of annuity ordinary
A=p [(1-(1+I)^-kn)/I]
Solve for n
N=[log ((AI/p)-1)/log (1+I)]/-k equation
A 125000
I 0.05/12
P 562
K 12
Plug in the equation above
N=52.39 years round your answer
N=52.4 years
So the answer is c