Jake borrows $35,000 to finance the expansion of his business. He promises to repay with the...

Jake borrows $35,000 to finance the expansion of his business. He promises to repay with the entire amount plus interst in exactly 5 years. The annual interest rate is 7.5%. What is the amount of Jake's monthly payments? Please answer using excel formulas & show your work. Thanks.

Expert Solution

P = Amount of loan = $35,000

n = 5*12 = 60 months

r = monthly interest rate = 7.5%/12 = 0.625%

Monthly payment = [r * PV] / [1 - (1+r)^-n]

= [0.625% * $35,000] / [1 - (!+0.625%)^-60]

= $218.75 / 0.311908176

= $701.328202

Monthly payment is $701.33

Amortization Schedule
Month	Beginning Balance	Payment	Interest Repayment of principal	Principal Portion	Ending Balance
A	B	C	*D = B0.625%**	E = C-D	F = B-E
1	35000	701.33	218.75	482.58	34517.42
2	34517.42	701.33	215.733875	485.596125	34031.8239
3	34031.8239	701.33	212.6988992	488.6311008	33543.1928
4	33543.1928	701.33	209.6449548	491.6850452	33051.5077
5	33051.5077	701.33	206.5719233	494.7580767	32556.7497
6	32556.7497	701.33	203.4796853	497.8503147	32058.8993
7	32058.8993	701.33	200.3681209	500.9618791	31557.9375
8	31557.9375	701.33	197.2371091	504.0928909	31053.8446
9	31053.8446	701.33	194.0865285	507.2434715	30546.6011
10	30546.6011	701.33	190.9162569	510.4137431	30036.1874
11	30036.1874	701.33	187.726171	513.603829	29522.5835
12	29522.5835	701.33	184.516147	516.813853	29005.7697
13	29005.7697	701.33	181.2860604	520.0439396	28485.7257
14	28485.7257	701.33	178.0357858	523.2942142	27962.4315
15	27962.4315	701.33	174.765197	526.564803	27435.8667
16	27435.8667	701.33	171.474167	529.855833	26906.0109
17	26906.0109	701.33	168.162568	533.167432	26372.8434
18	26372.8434	701.33	164.8302716	536.4997284	25836.3437
19	25836.3437	701.33	161.4771483	539.8528517	25296.4909
20	25296.4909	701.33	158.1030679	543.2269321	24753.2639
21	24753.2639	701.33	154.7078996	546.6221004	24206.6418
22	24206.6418	701.33	151.2915115	550.0384885	23656.6033
23	23656.6033	701.33	147.8537709	553.4762291	23103.1271
24	23103.1271	701.33	144.3945445	556.9354555	22546.1917
25	22546.1917	701.33	140.9136979	560.4163021	21985.7754
26	21985.7754	701.33	137.411096	563.918904	21421.8565
27	21421.8565	701.33	133.8866029	567.4433971	20854.4131
28	20854.4131	701.33	130.3400816	570.9899184	20283.4231
29	20283.4231	701.33	126.7713946	574.5586054	19708.8645
30	19708.8645	701.33	123.1804034	578.1495966	19130.7149
31	19130.7149	701.33	119.5669684	581.7630316	18548.9519
32	18548.9519	701.33	115.9309494	585.3990506	17963.5529
33	17963.5529	701.33	112.2722054	589.0577946	17374.4951
34	17374.4951	701.33	108.5905941	592.7394059	16781.7557
35	16781.7557	701.33	104.8859729	596.4440271	16185.3116
36	16185.3116	701.33	101.1581977	600.1718023	15585.1398
37	15585.1398	701.33	97.40712392	603.9228761	14981.217
38	14981.217	701.33	93.63260595	607.6973941	14373.5196
39	14373.5196	701.33	89.83449724	611.4955028	13762.0241
40	13762.0241	701.33	86.01265034	615.3173497	13146.7067
41	13146.7067	701.33	82.16691691	619.1630831	12527.5436
42	12527.5436	701.33	78.29714764	623.0328524	11904.5108
43	11904.5108	701.33	74.40319231	626.9268077	11277.584
44	11277.584	701.33	70.48489976	630.8451002	10646.7389
45	10646.7389	701.33	66.54211789	634.7878821	10011.951
46	10011.951	701.33	62.57469362	638.7553064	9373.19567
47	9373.19567	701.33	58.58247296	642.747527	8730.44815
48	8730.44815	701.33	54.56530091	646.7646991	8083.68345
49	8083.68345	701.33	50.52302155	650.8069785	7432.87647
50	7432.87647	701.33	46.45547793	654.8745221	6778.00195
51	6778.00195	701.33	42.36251217	658.9674878	6119.03446
52	6119.03446	701.33	38.24396537	663.0860346	5455.94842
53	5455.94842	701.33	34.09967765	667.2303223	4788.7181
54	4788.7181	701.33	29.92948814	671.4005119	4117.31759
55	4117.31759	701.33	25.73323494	675.5967651	3441.72082
56	3441.72082	701.33	21.51075516	679.8192448	2761.90158
57	2761.90158	701.33	17.26188488	684.0681151	2077.83346
58	2077.83346	701.33	12.98645916	688.3435408	1389.48992
59	1389.48992	701.33	8.684312026	692.645688	696.844236
60	696.844236	701.33	4.355276476	696.9747235	0

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