Question
In: Finance
A small business owner visits her bank to ask for a loan. Theowner states that...
A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $900 per month for the next two years and then $1,800 per month for three years after that. If the bank is charging customers 8.5 percent APR, how much would it be willing to lend the business owner? (Round your answer to two decimal places.)
Solutions
Expert Solution
We need to find the present value of the future repayments.
Monthly interest rate, r = 8.5%/12 = 0.007083333333
First, let's find the present value of the first two years of payment.
PMT = 900
n = 2 * 12 = 24
r = 0.007083333333
Now, we will find the present value of the next three years of payment
PMT = 1,800
r = 0.007083333333
n = 3 * 12 = 36
The will be willing to lend (19,799.5080376376 + 48,135.1126383916) = $67,934.6206760292
Answer: $67,934.62
jeff jeffy answered 2 years agoRelated Solutions
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owner states that she can repay a loan at $900 per month for the
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that. If the bank is charging customers 8.5 percent APR, how much
would it be willing to lend the business owner? (Round your answer
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owner states that he can repay a loan at $1,800 per month for the
next three years and then $800 per month for two years after that.
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it be willing to lend the business owner? (Do not round
intermediate calculations and round your final answer to 2 decimal
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