Suppose you have a student loan of $60,000 with an APR of 8% for 25 years. What are your required monthly payments?

Question

Suppose you have a student loan of $60,000 with an APR of 8% for 25 years. What are your required monthly payments?

Answer 1

PMT = PV(r/n)/[1 - (1 + r/n)^-nt] = 60000(0.08/12)/[1 - (1 + 0.08/12)^-12·25] = $463.09 per month

Answer 2

The formula is:

PMT= P(r/n)/(1-(1+r/n)^-nt)

Where:

PMT = the monthly payment

P = loan amount or the amount borrowed

r= rate

t= time in years

n= number times the money is compounded in a year. Usually n=12 because it's monthly.

PMT = 60000(.08/12)/(1-(1+.08/12)^-12•25)

PMT = $463.09