Paying off your student loan in 1 year
No more borrowing money from your "friend" anymore! In this exercise, you have decided to pay off your $10,000 student loan in 1 year.
The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate.
The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid.
You are trying to find out what your interest is every month.
This exercise is part of the course
Loan Amortization in Google Sheets
Exercise instructions
- In column
C, enter the correct interest in every month by multiplying the opening balance by the interest rate in cellB17. - Copy the formula down to every cell until the closing balance becomes zero. (In this case, the balance will be -$0.10; this is due to rounding.)
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