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Consider a student loan of $12, 500 at a fixed APR rate of 9% 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.

Respuesta :

The monthly payment is; $104.9; The total amount paid over the term of the loan is; $31470

How to calculate APR?

We are given;

Loan principal = $12,500

Interest rate = 12%

Number of payments per year = 12 payments per year.

Loan term = 25 years.

Formula for monthly payment is;

PMT = (p * APR/n)/[1 - (1 + APR/n)^(-nY)]

Where;

p is principal

APR is interest rate

n is number of payments per year

Y is loan term

Thus;

PMT = (12500 * 0.09/12)/[1 - (1 + 0.09/12)^(-12 * 25)]

PMT = 93.75/(1 - 0.106288)

PMT = $104.9

B) Total amount paid over the loan term is;

A = PMT * m * n

where;

m is number of months in a year,

n is number of years

A = 104.9 * 12 * 25

A = $31470

C) The principal as a percentage of the loan is;

P/A = 12500/31470

P/A = 39.72%

Percentage paid for interest is = 100% - 39.72% = 80.28%

Read more about APR at; https://brainly.com/question/24703884

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