Final answer:
To calculate the monthly payment for a student loan of $26,027 at a fixed APR of 8% for 18 years, you can use the formula for the present value of an annuity. Plugging in the values from the question, the monthly payment comes out to be approximately $273.35.
Step-by-step explanation:
To calculate the monthly payment for a student loan, you can use the formula for the present value of an annuity. The formula is:
PMT = PV × r ÷ (1 - (1 + r)^-n)
Where:
- PMT = Monthly payment
- PV = Present value of the loan
- r = Monthly interest rate
- n = Total number of payments
Plugging in the values from the question: PV = $26,027, r = 8% (or 0.08), and n = 18 years (or 216 months), we can calculate:
PMT = $26,027 × 0.08 ÷ (1 - (1 + 0.08)^-216)
Using a calculator or spreadsheet, the monthly payment comes out to be approximately $273.35.