SOLUTION: Josie has a balance of $16,500 on her student loans. If she agrees to a 5 year repayment plan with an interest rate of 3.4% compounded monthly, what will her monthly payments b

Click here to see ALL problems on Finance

Question 1078086: Josie has a balance of $16,500 on her student loans. If she agrees to a 5 year repayment plan with an interest rate of 3.4% compounded monthly,
what will her monthly payments be?

how much will she pay over the 5 years?
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
loan balance is 16,500.

monthly payments at 3.4% annual interest compounded monthly.

monthly interest rate is 3.4% / 12 = .283333333.....%

5 yeears * 12 = 60 month repayment plan.

end of month payments assumed.

inputs to online financial calculator are shown below:

outputs from online financial calculator after you click on PMT are shown below:

financial calculator can be found here:

https://arachnoid.com/finance/

summary of financial formulas can be found here:

https://www.algebra.com/algebra/homework/Finance/THEO-2016-04-29.lesson#notes

formula you are looking for is shown below:

ANNUITY FOR A PRESENT AMOUNT WITH END OF TIME PERIOD PAYMENTS
a = (p*r)/(1-(1/(1+r)^n))
a is the annuity.
p is the present amount.
r is the interest rate per time period.
n is the number of time periods.

when using this formula:

replace p with 16500
replace r with 3.4% / 12 / 100% = .00283334
replace n with 5 * 12= 60

formula should look like this:

a = (16500*.00283334)/(1-(1/(1+.00283334)^60)) = 299.43

calculator uses interest rate percent.
formula uses interest rate = %/100.

in the calculator, if present value is shown as positive, then amt will be shown as negative, and vice versa.

if you are trying to duplicate the formula results, make sure you enter parentheses exactly as shown.