Kelsey S asked:
If a company is taking out a loan for 60% of it’s Net Income ($27,600), and the length of the loan is 5 years with an annual interest rate of 6.25% – making 12 equal payments every year.
If a company is taking out a loan for 60% of it’s Net Income ($27,600), and the length of the loan is 5 years with an annual interest rate of 6.25% – making 12 equal payments every year.
I have that the monthly payments would be $295 and that the total loan amount ($295*60) equals $17,714.
However, it does not seem to fit in nicely with my problem – is there some error i am making??
At the end of 2009 Ullswater Inc. intends to undertake an expansion of its facilities. To finance this expansion project, they turn to Guiyang Bank Inc. which agrees to extend a loan equal to 60% of 2009’s net income. The length of the loan is 5 years at an annual interest rate of 6.25%. Moreover, each year Ullswater Inc. will be required to make 12 equal payments on the loan.
Dorothy
