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Grade 129 grade maths

Betty took out a subsidized student loan of $35,000 at a 4.8% APR, compounded monthly, to pay for her last four semesters of college. If she will begin paying off the loan in 21 months with monthly payments lasting for 20 years, what will be the amount of her monthly payment?

Profile image of liam
8 Years agoGrade 12
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1 Answer

Profile image of Arun
ApprovedApproved Tutor Answer8 Years ago
Dear student
 
Hi Chelsie 

Her amount due = 35,000(1.004)^273 
If her monthly payment is x 
She'll pay = x(1.004)^240 + x(1.004)^239 + ....x(1.004)^1 + x 
= x[(1.004)^241 - 1]/(1.004-1) = 
Her payment = Amount due 
so 
x[(1.004)^241 - 1]/(1.004-1) = 35000(1.004)^273 
404x = 35000(1.004)^273 = 104081
x = 104081/404 = $257.6

Monthly payment = $257.6
 
Regards
Arun (askIITians forum expert)

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