Donna is taking out an amortized loan for $92,000 to open a small business and is deciding between the offers from two lenders.
She wants to know which one would be the better deal over the life of the small business loan, and by how much.

Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. (a)	A savings and loan association has offered her a 10-year small business loan at an annual interest rate of 11.2%. Find the monthly payment.

To determine the monthly payment for Donna's 10-year small business loan, we can use the formula for the monthly payment of an amortized loan:

\[
M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}
\]

where:
- $ M $ is the monthly payment,
- $ P $ is the loan principal (i.e., the amount borrowed),
- $ r $ is the monthly interest rate (annual interest rate divided by 12),
- $ n $ is the total number of payments (loan term in years multiplied by 12).

Given values:
- $ P = 92{,}000 $ dollars,
- Annual interest rate = 11.2%, so the monthly interest rate $ r = \frac{11.2\%}{12} = \frac{0.112}{12} = 0.00933333 $,
- Loan term = 10 years, so the total number of payments $ n = 10 \times 12 = 120 $.

Substituting the values into the formula:

\[
M = \frac{92{,}000 \times 0.00933333 \times (1 + 0.00933333)^{120}}{(1 + 0.00933333)^{120} - 1}
\]

Let's calculate the monthly payment.The monthly payment for Donna's 10-year small business loan at an annual interest rate of 11.2% would be **$1,277.74**.

Do you have any questions, or would you like more details on this calculation?

Here are some related questions that might interest you:
1. How much total interest will Donna pay over the life of the loan?
2. What would the monthly payment be if the loan term was 15 years instead of 10?
3. How would the monthly payment change if the interest rate was reduced to 9%?
4. What would be the balance of the loan after 5 years?
5. How much of the first payment goes towards interest?

**Tip:** When comparing loan offers, always consider the total amount paid over the life of the loan, not just the monthly payment.

Learn how to calculate the monthly payment for a $92,000 small business loan over 10 years with an annual interest rate of 11.2%. Understand the amortized loan formula and see step-by-step calculations. Suitable for financial planning and small business owners.

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