You have just completed your four-year degree. Your student loans that you have accumulated while studying total $25,000. Since you have graduated, you must now begin repaying these student loans. The loan’s annual interest rate is six percent (6%) and it requires four equal end-of-year payments.
1) Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances.
2) What is the total amount that you will repay over this four-year period (principal + interest)?
a. What portion or percentage are the total “Interest Payments” of the initial loan value of $25,000?