You have recently found a location for your bakery and have begun implementing the first phases of your business plan. Your budget consists of an $80,000 loan from your family and a $38,250 small business loan. These loans must be repaid in full within 10 years
And your question is?
what do u need to figure out with the 2 givens?
You have recently found a location for our bakery and have begun implementing the first phases of your business plan. Your budget consists of an $80,000 loan from your family and a $38,250 small business loan. These loans must be repaid in full within 10 years.
To determine the monthly repayment amount for your loans, you need to consider the loan amounts, interest rates, and repayment terms. Let's break it down step by step:
1. Loan Amount from Family: $80,000
2. Small Business Loan Amount: $38,250
Next, let's consider the repayment terms:
1. Loan Amount from Family: You mentioned that the loan must be repaid in full within 10 years. To calculate the monthly repayment for this loan, we need to convert the loan term from years to months. So, 10 years x 12 months = 120 months.
2. Small Business Loan Amount: You didn't provide specific repayment terms for this loan. Generally, small business loans have a repayment term of 5-10 years. Let's assume a repayment term of 7 years for this loan. So, 7 years x 12 months = 84 months.
Now, you need to consider the interest rates on each loan. The interest rates will impact the monthly repayment amount. Let's assume an interest rate of 6% for both loans.
1. Loan Amount from Family: $80,000 x 6% = $4,800 (annual interest)
Monthly interest = $4,800 / 12 = $400
2. Small Business Loan Amount: $38,250 x 6% = $2,295 (annual interest)
Monthly interest = $2,295 / 12 = $191.25
With these calculations, you can determine the monthly repayment amounts for each loan:
1. Loan Amount from Family: Loan Amount + Monthly Interest = $80,000 + $400 = $80,400
Monthly repayment for the loan from family = $80,400 / 120 months = $670
2. Small Business Loan Amount: Loan Amount + Monthly Interest = $38,250 + $191.25 = $38,441.25
Monthly repayment for the small business loan = $38,441.25 / 84 months = $457.87
So, the monthly repayment amounts for your loans will be approximately $670 for the loan from your family and $457.87 for the small business loan. Keep in mind that these calculations don't include any additional fees or extra costs that may be associated with the loans. It's always a good idea to consult with a financial advisor or your loan provider for more accurate calculations.