ANSWER:
The monthly payments for student loan of 20,000 is $183.34.
SOLUTION:
Given, a student loan of 20,000 at a fixed APR of 6% for 20 years
We need to calculate monthly payments.
Now, we need to follow the below procedure to calculate monthly payments.
Convert the annual rate from percentage to decimal format (by dividing by 100)
[tex]\frac{6}{100}[/tex] = 0.06 annually
Now, Divide the annual rate by 12
[tex]\frac{0.06}{12}[/tex] = 0.005
Then, Calculate the monthly interest on $20,000
[tex]0.005 \times 20000[/tex] = 100
Now, loan amount to be paid per month is total amount divided by time span
[tex]$\frac{20000}{20 \times 12} = 183.34$[/tex]
Hence, the monthly payments are $183.34.
