Question

Jasmine is taking out a small business loan for her floral shop. She plans to apply for a $30,000 loan with a 5-year term and a 3.75% interest rate. She is unsure of her expected monthly profits, so she wants to know the benefit of a smaller loan. Using the loan amortization formula, how much money would Jasmine save over the life of the loan if she were to borrow $10,000 less?

Answer 1

Answer:

Monthly pay = int. rate / 12 months * cost of car after downpayment / (1-(1+ int. rate/12 months)^( - term length of loan )

Step-by-step explanation:

Just plug in your numbers:

M = 0.0375/12 * 30000/(1-(1+.0375/12)^60)

since 5 years is 60 months