Question

a business is looking to finance $50,000 worth of manufacturing equipment. the financing plan includes a fixed application fee of $500 and an origination fee of 2%. the business makes a $5,000 down payment and plans to repay the fees with the remaining principal through their monthly payments. the business plans to repay the money in 48 months because there is a 0% interest promotion for the first 48 months. how much will the monthly payment be? round your answer to the nearest cent
the business will pay $ per month for 48 months.

Explanation:

Step1: Calculate the total fees

The origination fee is \(2\%\) of \(\$50,000\). So, the origination fee \(= 0.02\times50000=\$1000\).
The total fees \(=\) fixed application fee \(+\) origination fee \(=500 + 1000=\$1500\).

Step2: Calculate the amount to be financed

The cost of equipment is \(\$50,000\). The down - payment is \(\$5000\).
The amount to be financed (including fees) \(=(50000 - 5000)+1500=\$46500\).

Step3: Calculate the monthly payment

Since the interest rate \(r = 0\%\) for \(n = 48\) months.
The monthly payment \(M=\frac{\text{Amount to be financed}}{n}\).
\(M=\frac{46500}{48}\)
\(M = 968.75\)

Answer:

\(968.75\)