Suppose you graduate with a debt of $42,000 that you or someone must repay. One option is to pay off the debt in constant amounts at the beginning of each month over the next 10 years at a nominal annual interest rate of 10%. What is the constant beginning-of-month payment

$352.77

Explanation:

EMI = P*r* (1+r)^n / ((1+r)^n - 1)

E is EMI

P i= $42,000

r = 10/12/100 = 0.00833

n = 10*12 = 120

Constant beginning of month payment Equated Monthly Installment:

= $42,000*0.00833*(1+0.00833)^120/[(1+0.00833)^120-1]

= $42,000 *0.00833*(1.00833)^120 / (1.00833)^119

= $42,000 *0.00833*2.70596783436/2.68361333528

= 352.7743337996242

= $352.77