Question

Oscar’s Kennels spent $130,000 to refurbish its current facility. The firm borrowed 70 percent of the refurbishment cost at 4.5 percent interest for five years. What is the amount of each monthly payment

Answer 1

Answer:

$1696.51

Explanation:

70% of $130 000 = $91 000; number of payments = 12 * 5 years = 60 months ; 4.5% is converted to 4.5/1200 to accommodate the monthly repayments being calculated.

Loan monthly repayment

= principal  [ interest (1+ interest)^ number of payments] / [(1+interest)^number of payments - 1]

$91 000 [(4.5/1200* (1+ 4.5/1200)^ 60)] / [((1+4.5/1200)^60) - 1]  

= 1696.514751

= 1696.51