Question

18. Owen has a student loan balance of $60,000 when he graduates from college. He combines all these loans into a single account that has a 5% interest rate and has the following options for monthly payments. Complete the chart below, to the nearest $1. Payment Plan Total Interest Total of all Payments Interest in 1st Payment Principal in 1st Payment $396 per mo. for $250 $396*12*20 = $95,040 20 years $95040 - 60000 $35,040 $396 250 = $146 $474 per mo. for $250 $474 - 250 $224 15 years S636 per mo. for $250 10 years

Answer 1

Answer:

Payment Plan	Total of all Payments	Total Interest	Interest in 1st Payment	principal in 1st payment
$396 for 20 yrs	95040	35040	250	146
$474 for 15 yrs	85320	25320	250	224
$636 for 10 yrs	76320	16320	250	386

Explanation:

The missing values are obtained using the following formula,

$\text{Total of all Payments}=\text{Payment per mon.}\times \text{Number of years}\times 12$

$\text{Total Interest}=\text{Total of all Payments}- \text{loan amount}$

$\text{Principal in 1st payment}=\text{payment per month}- \text{Interest in 1st payment}$

Payment Plan	Total of all Payments	Total Interest	Interest in 1st Payment	principal in 1st payment
$396 for 20 yrs	$396*12*20 = $95040	$95040-60000 = $35040	250	396-250=146
$474 for 15 yrs	$474*12*15 = $85320	$85320-60000 = $25320	250	474-250=224
$636 for 10 yrs	$636*12*10 = $76320	$76320-60000 = $16320	250	636-250=386