Question: Sarah wants to start a cupcake business and was approved for a business loan. The loan has 0% interest if she pays the entire amount back in 5 years, which she decides to do. If she put $10,000 down as a down payment and her monthly payments are $600.00, how much was her loan for (including the down payment)? Think carefully first, then make a decision:
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To avoid interest she'll make payments for 5 years. There are 12 months in 1 year so that's 5 * 12 = 60 months. Each monthly payment is $600.00 and she'll pay that for 60 months for a total of 600 * 60 = $36,000. She also put $10,000 down as a down payment and her monthly payments came out to $36,000 so her loan was for 10000 + 36000 = $46,000. So the answer is 46000.
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