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Consider a student loan amount of $200,000 with an interest rate of 9.5% per year.

A. Calculate the monthly payment if the loan is to be repaid in 30 years.

B. The student makes monthly payments for 1 year. Then, due to success of his/her startup, he/she pays off the full amount of the loan at the end of year 1. How much does he/she have to pay at the end of year 1?

C. What is the present value of the payment computed in Part B.

D. Compute the difference between the original student loan and the present value computed in Part C. This is the principle paid in the 1st year. E. Compute the total sum of payments in the 1st year and subtract the principle. This is the amount of interest paid on the loan.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92311635

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