You have accumulated $85,000 in student loans that average 5% interest. You graduate next month and will be paying off the loans over 10 years. Which of the following is most likely to be your monthly payment assuming you pay interest and a portion of the principal each month?
ANSWER: The student will have to pay $900 per month including interest and a portion of principal.
EXPLANATION: The monthly payment assuming interest and a portion of the principal each month would be $901.55. As the student loan is of 10 years which means 120 months, the student will have to pay $108,186 as the total payment including the total interest of $23,186.
