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Unformatted text preview: PMT = $15 , 000 ( . 055 12 ) ( 1 + . 055 12 ) 12 31 $384 . 19 . 1 Math 1012: QRMS Quiz 3 Mar. 2, 2012 4D 45 Suppose you have a student loan of $30,000 with an APR of 9% for 20 years. Suppose you would like to pay o the loan in 10 years instead of 20. What monthly payments will you need to make? Solution: Using the formula for loan payments with monthly compounding we compute: PMT = P ( APR n ) 1( 1 + APR n )nY = $30 , 000 ( . 09 12 ) 1( 1 + . 09 12 )12 10 $380 . 03 . Note that we are using Y = 10 since were trying to pay of the loan in 10 years, even though the original loan term is 20 years. This reduces the total amount of interest paid over the duration of the loan. 2...
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 Spring '05
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