Consider a student loan of $25,000 at a fixed APR of 6% for 25 years. a. Calcula
ID: 3056101 • Letter: C
Question
Consider a student loan of
$25,000
at a fixed APR of
6%
for
25
years.
a. Calculate the monthly payment.
b. Determine the total amount paid over the term of the loan.
c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest.
a. The monthly payment is
$nothing.
(Do not round until the final answer. Then round to the nearest cent as needed.)
b. The total payment over the term of the loan is
$nothing.
(Round to the nearest cent as needed.)
c. Of the total payment over the term of the loan,
nothing%
is paid toward the principal and
nothing%
is paid toward interest.
(Round to the nearest tenth as needed.)
Explanation / Answer
a) for monthly payment
Use excel functionPMT(0.06/12,12*25,-25000,0,0)
= $161.08
b) total amount paid over the term of the loan = 149.89*25*12 = $48,322.61
c) Interest paid = 48,322.61-25000 = $23,322.61
% of interest paid = $23,322.61/$48,322.61 = 48.26%
% of Principal paid = 25000/$48,322.61 = 51.74%