We use cookies to personalise content and advertisements and to analyse access to our website. Furthermore, our partners for online advertising receive pseudonymised information about your use of our website.
Please click on "Accept cookies" if you agree to the setting of cookies. Cookies that do not require consent remain unaffected by this, see
cookie policy and privacy policy.
DECLINE COOKIES

I have accumulated over a 4-year period a student loan of about $50,000. Now that I have graduated and landed a good-paying job, and wish pay off at least half of it in 5 years, what would my monthly payment be given a current rate of interest of 3.75% compounded monthly? would appreciate any help and thank you.

Guest Jun 10, 2017

#1**0 **

Since we know 4 variables out of 5, will use this formula to give us the 5th unknown, which is the monthly payment:

-P*[(1-(1+R)^-N)/(R)]+FV*(1+(R))^-N+PV=0

Where P = The monthly payment

R = 3.75%. Will divide this by 12 to give us the monthly interest rate of 0.003125.

N = 5 years x 12 months = 60 months.

FV =$25,000 the balance of the loan after 5 years.

PV = $50,000 The Present Value of the loan.

-P*[(1-(1.003125)^-60)/(0.003125)]-25000*(1.003125)^-60+50000=0

Solve for P:

29268.2 - 54.6331 P = 0

**P = 535.72 - Your monthly payment. After 5 years you will still have a loan balance of $25,000.**

Guest Jun 10, 2017

edited by
Guest
Jun 10, 2017