Question

Amanda has $43,625 in student loans with 3.78% interest. She plans to pay back her student loans in years. a) What will her monthly payment be? b) What is will be the total payback (A)? c) How much will be spent on interest (I)?​

Answer 1

Amanda's monthly payment will be approximately $806.08. The total payback will be $48,364.80 and the amount spent on interest will be $4,739.80.

Step-by-step explanation:

To calculate Amanda's monthly payment, we can use the formula for calculating monthly loan payments:

Monthly Payment (P) = (Principal * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate) ^ (-Number of Payments))

Where:

• Principal = $43,625
• Monthly Interest Rate = 3.78% / 12 = 0.315%
• Number of Payments = number of years * 12

Let's calculate:

Number of Payments = 5 * 12 = 60

Monthly Payment (P) = (43625 * 0.315%) / (1 - (1 + 0.315%) ^ (-60))

After evaluating the above expression, the monthly payment will be approximately $806.08.

To calculate the total payback (A), we can multiply the monthly payment by the number of payments:

Total Payback (A) = Monthly Payment * Number of Payments

Substituting the values, Total Payback (A) = $806.08 * 60 = $48,364.80

The amount spent on interest (I) can be calculated by subtracting the principal (initial loan amount) from the total payback:

Interest (I) = Total Payback - Principal = $48,364.80 - $43,625 = $4,739.80