A student borrows $65,000 for business school at 8.5% stated annual interest with monthly repayment over 8years. Consider this as a loan with no payments or interest during school so that the problem structure isequivalent to a standard loan received one period before the first payment. Suppose that to better matchexpected student salary growth over time, the loan is structured as a growing annuity with each monthlypayment growing by 0.2% compared to the previous monthly payment. How much is the first monthlypayment? Please round your answer to the nearest hundredth.

This is a growing annuity where the payment increase by 0.2%. By rearranging the PV of growing…

Answered: A student borrows $65,000 for business…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose a graduate student receives a non-subsidized student loan of $11,000 for each of the 4 years the student pursues a PhD. If the annual interest rate is 3% and the student has a 10-year repayment program, what are the student's monthly payments on the loans after graduation? (Round your answer to the nearest cent.)
1. Exercise One: Jessica decides to take a $25,000 to help her cover her tuition expenses. The tenor of the loan is 10 years, and the interest rate is 6.75%. Repayments will be made on a monthly frequency. Based on the aforementioned information, and the material covered in class, (a) use the PMT function in Excel to find the fixed total payment, (b) verify your answer from (a) by programming the present value annuity formula as shown in class, (c) create an amortization schedule for this loan, (d) create a bar chart showing the Fixed Total Payment, Interest Paid, and Principal Paid.
To pay for your education, you've taken out $91,000 in student loans. If you make monthly payments over 10 years at 5% APR interest compounded monthly, how much are your monthly student loan payments? Your Answer:
You receive a 10-year subsidized student loan of $19,000 at an annual interest rate of 6.8%. What are your monthly loan payments for this loan when you graduate? (Round your answer to the nearest cent.)
A company wants to have $30,000 at the beginning of each 6-month period for the next 4 1/2 years. If an annuity is set up for this purpose, how much must be invested now if the annuity earns 6.42%, compounded semiannually? (b) Solve the problem. (Round your answer to the nearest cent.)$ _____
You just borrowed $10,000 at a rate of i(¹2)=8% per year and you pay $150 per month, starting in one month: a) How long do you expect to be paying the loan? b) If you paid the loan off with a balloon payment, how large would that payment be? c) If you paid the loan off with a drop payment, how large would that payment be?
You estimate that you will have $56,500 in student loans by the time you graduate. The interest rate is 4.5 percent. If you want to have this debt paid in full within five years, how much must you pay each month?
In order to start a small business, a student takes out a simple interest loan for $3000 for 9 months at a rate of 11.25%. a. How much interest must the student pay? b. Find the future value of the loan.
What is the total amount you will have to repay for your $19,000 student loan if the interest rate is 5% APR with monthly compounding and you pay equal monthly payments over the 10 year life of the loan? Your Answer
(Annuity payments) To pay for your education, you've taken out $21,000 in student loans. If you make monthly payments over 13 years at 6 percent compounded monthly, how much are your monthly student loan payments? The monthly payment of your student loan is $ nearest cent.) (Round to the
To help pay for college, you have just taken out a$1,000 government loan that makes you pay $126per year for 25 years. However, you don’t have to startmaking these payments until you graduate from collegetwo years from now. Why is the yield to maturitynecessarily less than 12%? (This is the yield to maturityon a normal $1,000 fixed-payment loan on which youpay $126 per year for 25 years.)
A friend of yours who had taken an engineering economy course stated that paying on a student loan even before graduation will give you a big break on the total loan costs. She cites the following example to illustrate her point. A student takes out a $10,000 loan for their freshman year of college, and the interest rate is 7% compounded semi-annually over 10 years. With full deferral of this loan, meaning that no payments are dueuntil six months after graduation, the original loan will have grown to $13,630 thanks to interest: F = $10, 000(F/P, 3.5% per six months, 9 periods) = $13, 630. Your friend says that paying just $75 per month, or $4,050 over the same 4.5 years would reduce the ending balance to about $8,960. Show how this amount ($8,960) was determined.

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