what formula would i use to solve for this:
Loan Interest A developer needs $80,000 to buy land. He is able to borrow the money at 10% per year compunded quarterly. How much will the interest amount to if he pays off the loan in 5yrs?
You need a loan amortization table to determine the quarterly installment payment required to pay off the loan in 5 years (20 quarters). You can find a useful took at http://www.yona.com/loan/
I get the quarterly payment to be $5131.77 and the total interest paid to be $22,635.40
To solve for the loan interest in this scenario, you need to use a loan amortization table. This table will help you determine the quarterly installment payment required to pay off the loan in the specified timeframe.
To calculate the quarterly payment using the loan amortization table, follow these steps:
1. Go to a loan amortization table tool like http://www.yona.com/loan/.
2. Enter the loan amount ($80,000), interest rate (10% per year), loan term (5 years), and compounding frequency (quarterly) into the tool.
3. The tool will generate a table that shows the breakdown of payments over time, including the quarterly payment required to pay off the loan in the given term.
According to the provided tool, the quarterly payment required to pay off the loan in 5 years (20 quarters) is $5,131.77.
To calculate the total interest paid over the course of the loan, multiply the quarterly payment by the total number of quarters (20) and subtract the original loan amount ($80,000):
Total Interest Paid = (Quarterly Payment x Number of Quarters) - Loan Amount
Total Interest Paid = ($5,131.77 x 20) - $80,000
Total Interest Paid = $102,635.40 - $80,000
Total Interest Paid = $22,635.40
Therefore, the total interest will amount to $22,635.40 if the developer pays off the loan in 5 years.