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A student takes out a college loan of $7000 at an annual percentage rate of 5%, compounded monthly. a. If the student makes payments of $800 per month, how much, to the nearest dollar, does the student owe after 5 months

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Zviko

Answer:

$3,114

Explanation:

The question in other words requires us to find the future value (FV) of the loan after 5 years when monthly payments of $800 are being made every month.

So, using a Financial calculator this can be solved as follows :

PV = $7000

I = 5 %

P/Yr = 12

PMT = - $800

N = 5

FV = ?

Solving for FV by inputting the values as above in the calculator we get $3,114

Conclusion :

The student owes $3,114 after 5 months

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