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