SOLUTION: The small business Administration offers business loans at 4.95% interest compounded monthly for 10 years. If the owner of a restaurant can afford monthly payments of $1000, what i

Question 1181792: The small business Administration offers business loans at 4.95% interest compounded monthly for 10 years. If the owner of a restaurant can afford monthly payments of $1000, what is the maximum amount the owner can borrow?
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
Can start with the payment formula or P=(r/k)(PV)/[1-(1+(r/k))^-Nk]
and with r=0.0495 and k=12 and N=10 years,
rewrite the formula as P/[1-(1+(r/k))^-Nk]/(r/k)=PV or present value
This is PV=1000*(1-(1+(0.0495/12)^-120))/(0.0495/12)
=$94498.95 or about $95000.
Round at the end, not intermediate steps.
RELATED QUESTIONS
A small business borrows $31,000 for expansion at 7% compounded monthly.... (answered by Fombitz)

Todd wants to start a business in 3 years. He figures that he will need $10 000 to start. (answered by josgarithmetic)

Chelea took out three loans for a total of $76,000 to start an organic orchard. Her... (answered by stanbon)

im not sure what ategory this falls under but please help with step by step!! caroline... (answered by Theo)

Sara borrowed funds to buy furniture for her business. Her business paying $200 at the... (answered by Theo)

Initial budget: $80,000 loan from family $38,250small business loan from bank A:... (answered by Targetweek)

A small business owner borrowed $4,200 at an annual simple interest rate of 12%. What... (answered by rfer)

Chelsea took out three loans for a total of $79,000 to start an organic orchard. Her... (answered by richwmiller)

Will some one please help me with this word problem, I answered a) but am not even sure... (answered by vleith)