a small business loan in the amount of 50,000 with an interest rate of 9% that compounds monthly for 7 years what would my monthly payment be
let the payment be P
i = .09/12 = .0075
n = 7(12) = 84
P( 1 - 1.0075^-84)/.0075 = 50000
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P = $804.45
To calculate the monthly payment for a loan, you can use the loan repayment formula. The formula is:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = monthly payment
P = loan amount
r = monthly interest rate
n = number of monthly payments
First, let's convert the annual interest rate to a monthly interest rate. Divide the annual interest rate of 9% by 100 to get the decimal form: 0.09. Then, divide the result by 12 to get the monthly interest rate: 0.0075 (0.09/12).
Next, calculate the number of monthly payments. Since the loan term is 7 years and there are 12 months in a year, multiply 7 years by 12 to get 84 monthly payments (7 * 12).
Finally, plug these values into the loan repayment formula:
M = 50,000 * (0.0075 * (1 + 0.0075)^84) / ((1 + 0.0075)^84 - 1)
Calculating the result will give you the monthly payment for the loan.