posted by Mary on .
How would I calculate this problem. plz help I don't know how to...
An online store that has been successfully growing on its initial angel investment and revenues wants to invest $5 million to expand the business. The bank is willing to lend the business this money at a 10 percent interest rate over an eight-year term. Calculate the monthly payment, and explain what the business must be able to do with this money in order for this to be a smart business decision.
t = 8
Monthly n = 12
rate = 10%
thank you so much!
The above formula gives the amount of compounded (monthly) interest earned over an 8-year period, but does not provide the payment needed to amortize the loan.
That formula for monthly payment m is
m = Pr/(1 - (1+r)^-n)
In this case, we have
m = 5000000(.10/12)/(1 - (1+.10/12)^(-12*8))
thank you! ,Steve