Posted by Mary on Friday, November 15, 2013 at 12:10pm.
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 eightyear 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.

Math:Calculating Investment  Kuai, Friday, November 15, 2013 at 12:27pm
P(1+ r/n)^nt
t = 8
Monthly n = 12
rate = 10%

Math:Calculating Investment  Mary, Friday, November 15, 2013 at 12:31pm
thank you so much!

Math:Calculating Investment  Steve, Friday, November 15, 2013 at 12:39pm
The above formula gives the amount of compounded (monthly) interest earned over an 8year 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))
= 75,870.82

Math:Calculating Investment  Mary, Friday, November 15, 2013 at 12:42pm
thank you! ,Steve
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