Suppose that you borrowed $35,000 student loans from Sallie Mae to attend University. Once you graduate, you are required to start paying your loan and interest. The APR for your loan is 3.75%. Each month you will have to make interest payment and principal repayment.
Suppose that you can choose the following two repayment plans:
Standard repayment plan: if you choose this plan, you will have to pay off your loan in 10 years with the same amount of payment each month.
Fixed extended repayment plan: if you choose this plan, you will be allowed to pay off your loan in 25 years with the same amount of payment each month.
Please use Excel to work on the following questions:
How much should you pay each month for these two plans?
Set up the loan amortization tables for these two plans.
How much interest will you pay in total when you pay off your loan for these two plans?