You have a long-term goal of paying off your school loans in five years.You will graduate with a loan debt of $20,000 and an interest rate of 6%.How much will you need to pay each month to have the debt paid off in five years?

Question

Quizplus · Accepted Answer

To calculate the monthly payment needed to pay off a loan of $20,000 at an interest rate of 6% over five years, you can use the loan payment formula: $P = \frac{rPV}{1 - (1 + r)^{-n}}$, where P is the monthly payment, r is the monthly interest rate (annual rate divided by 12), PV is the present value or initial loan amount, and n is the total number of payments (months). For this loan, r = 0.06/12, PV = $20,000, and n = 5*12 = 60. Plugging these values into the formula gives a monthly payment of approximately $386.66.

You Have a Long-Term Goal of Paying Off Your School