Karl has $100,000 in student loans at 6% compounded monthly. How much will Karl's monthly payment be in order to pay off the loan in 10 years?

Question

Karl has $100,000 in student loans at 6% compounded monthly. How much will Karl's monthly payment be in order to pay off the loan in 10 years? ​

Quizplus · Accepted Answer

To find the monthly payment, we use the formula for an amortizing loan: M = P[r(1+r)^n]/[(1+r)^n – 1], where P is the principal ($100,000), r is the monthly interest rate (0.06/12), and n is the total number of payments (10*12). Calculating this gives a monthly payment of approximately $1,110.

Karl Has $100,000 in Student Loans at 6% Compounded Monthly