Consider a student loan of $17,500 at a fixed APR of 9% for 5 years. a....
Consider a student loan of $17,500 at a fixed APR of 9% for 5 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. . (Do not round until the final answer. Then round to the nearest cent as needed.)
Homework Answers
a.
Using PMT function in MS Excel, the monthly payment would be $ 363.27 or $ 363.3 or $ 363
Here is the schedule
| Month | Opening Balance | Interest | EMI | Principal Portion | Ending Balance |
| 1 | $ 17,500.0 | $ 131.3 | $ 363.3 | $ 232.0 | $ 17,268.0 |
| 2 | $ 17,268.0 | $ 129.5 | $ 363.3 | $ 233.8 | $ 17,034.2 |
| 3 | $ 17,034.2 | $ 127.8 | $ 363.3 | $ 235.5 | $ 16,798.7 |
| 4 | $ 16,798.7 | $ 126.0 | $ 363.3 | $ 237.3 | $ 16,561.4 |
| 5 | $ 16,561.4 | $ 124.2 | $ 363.3 | $ 239.1 | $ 16,322.4 |
| 6 | $ 16,322.4 | $ 122.4 | $ 363.3 | $ 240.9 | $ 16,081.5 |
| 7 | $ 16,081.5 | $ 120.6 | $ 363.3 | $ 242.7 | $ 15,838.8 |
| 8 | $ 15,838.8 | $ 118.8 | $ 363.3 | $ 244.5 | $ 15,594.4 |
| 9 | $ 15,594.4 | $ 117.0 | $ 363.3 | $ 246.3 | $ 15,348.1 |
| 10 | $ 15,348.1 | $ 115.1 | $ 363.3 | $ 248.2 | $ 15,099.9 |
| 11 | $ 15,099.9 | $ 113.2 | $ 363.3 | $ 250.0 | $ 14,849.9 |
| 12 | $ 14,849.9 | $ 111.4 | $ 363.3 | $ 251.9 | $ 14,598.0 |
| 13 | $ 14,598.0 | $ 109.5 | $ 363.3 | $ 253.8 | $ 14,344.2 |
| 14 | $ 14,344.2 | $ 107.6 | $ 363.3 | $ 255.7 | $ 14,088.5 |
| 15 | $ 14,088.5 | $ 105.7 | $ 363.3 | $ 257.6 | $ 13,830.9 |
| 16 | $ 13,830.9 | $ 103.7 | $ 363.3 | $ 259.5 | $ 13,571.4 |
| 17 | $ 13,571.4 | $ 101.8 | $ 363.3 | $ 261.5 | $ 13,309.9 |
| 18 | $ 13,309.9 | $ 99.8 | $ 363.3 | $ 263.4 | $ 13,046.4 |
| 19 | $ 13,046.4 | $ 97.8 | $ 363.3 | $ 265.4 | $ 12,781.0 |
| 20 | $ 12,781.0 | $ 95.9 | $ 363.3 | $ 267.4 | $ 12,513.6 |
| 21 | $ 12,513.6 | $ 93.9 | $ 363.3 | $ 269.4 | $ 12,244.2 |
| 22 | $ 12,244.2 | $ 91.8 | $ 363.3 | $ 271.4 | $ 11,972.7 |
| 23 | $ 11,972.7 | $ 89.8 | $ 363.3 | $ 273.5 | $ 11,699.2 |
| 24 | $ 11,699.2 | $ 87.7 | $ 363.3 | $ 275.5 | $ 11,423.7 |
| 25 | $ 11,423.7 | $ 85.7 | $ 363.3 | $ 277.6 | $ 11,146.1 |
| 26 | $ 11,146.1 | $ 83.6 | $ 363.3 | $ 279.7 | $ 10,866.5 |
| 27 | $ 10,866.5 | $ 81.5 | $ 363.3 | $ 281.8 | $ 10,584.7 |
| 28 | $ 10,584.7 | $ 79.4 | $ 363.3 | $ 283.9 | $ 10,300.8 |
| 29 | $ 10,300.8 | $ 77.3 | $ 363.3 | $ 286.0 | $ 10,014.8 |
| 30 | $ 10,014.8 | $ 75.1 | $ 363.3 | $ 288.2 | $ 9,726.6 |
| 31 | $ 9,726.6 | $ 72.9 | $ 363.3 | $ 290.3 | $ 9,436.3 |
| 32 | $ 9,436.3 | $ 70.8 | $ 363.3 | $ 292.5 | $ 9,143.8 |
| 33 | $ 9,143.8 | $ 68.6 | $ 363.3 | $ 294.7 | $ 8,849.1 |
| 34 | $ 8,849.1 | $ 66.4 | $ 363.3 | $ 296.9 | $ 8,552.2 |
| 35 | $ 8,552.2 | $ 64.1 | $ 363.3 | $ 299.1 | $ 8,253.1 |
| 36 | $ 8,253.1 | $ 61.9 | $ 363.3 | $ 301.4 | $ 7,951.7 |
| 37 | $ 7,951.7 | $ 59.6 | $ 363.3 | $ 303.6 | $ 7,648.1 |
| 38 | $ 7,648.1 | $ 57.4 | $ 363.3 | $ 305.9 | $ 7,342.2 |
| 39 | $ 7,342.2 | $ 55.1 | $ 363.3 | $ 308.2 | $ 7,033.9 |
| 40 | $ 7,033.9 | $ 52.8 | $ 363.3 | $ 310.5 | $ 6,723.4 |
| 41 | $ 6,723.4 | $ 50.4 | $ 363.3 | $ 312.8 | $ 6,410.6 |
| 42 | $ 6,410.6 | $ 48.1 | $ 363.3 | $ 315.2 | $ 6,095.4 |
| 43 | $ 6,095.4 | $ 45.7 | $ 363.3 | $ 317.6 | $ 5,777.8 |
| 44 | $ 5,777.8 | $ 43.3 | $ 363.3 | $ 319.9 | $ 5,457.9 |
| 45 | $ 5,457.9 | $ 40.9 | $ 363.3 | $ 322.3 | $ 5,135.6 |
| 46 | $ 5,135.6 | $ 38.5 | $ 363.3 | $ 324.8 | $ 4,810.8 |
| 47 | $ 4,810.8 | $ 36.1 | $ 363.3 | $ 327.2 | $ 4,483.6 |
| 48 | $ 4,483.6 | $ 33.6 | $ 363.3 | $ 329.6 | $ 4,154.0 |
| 49 | $ 4,154.0 | $ 31.2 | $ 363.3 | $ 332.1 | $ 3,821.9 |
| 50 | $ 3,821.9 | $ 28.7 | $ 363.3 | $ 334.6 | $ 3,487.3 |
| 51 | $ 3,487.3 | $ 26.2 | $ 363.3 | $ 337.1 | $ 3,150.1 |
| 52 | $ 3,150.1 | $ 23.6 | $ 363.3 | $ 339.6 | $ 2,810.5 |
| 53 | $ 2,810.5 | $ 21.1 | $ 363.3 | $ 342.2 | $ 2,468.3 |
| 54 | $ 2,468.3 | $ 18.5 | $ 363.3 | $ 344.8 | $ 2,123.5 |
| 55 | $ 2,123.5 | $ 15.9 | $ 363.3 | $ 347.3 | $ 1,776.2 |
| 56 | $ 1,776.2 | $ 13.3 | $ 363.3 | $ 349.9 | $ 1,426.2 |
| 57 | $ 1,426.2 | $ 10.7 | $ 363.3 | $ 352.6 | $ 1,073.7 |
| 58 | $ 1,073.7 | $ 8.1 | $ 363.3 | $ 355.2 | $ 718.4 |
| 59 | $ 718.4 | $ 5.4 | $ 363.3 | $ 357.9 | $ 360.6 |
| 60 | $ 360.6 | $ 2.7 | $ 363.3 | $ 360.6 | $ 0.0 |
b.
Total amount paid = 363.3 X 60 = $ 21,796.3
c.
Total payment is $ 21,796.3
Interest is $ 4,296.3 which is 19.71 % or 20% (rounded off)
Principal is 17,500 / 21,796.3 = 80.29% or 80.3% or 80% (rounded off)
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