# Math Help - Business Math Help needed

1. ## Business Math Help needed

I need some pointers for following problems. it's very urgent

1. Is it possible that the interest rate can be increased to a level where the loan term becomes infinite unless the periodic repayment is increased.

2. Exactly a year ago, Laura borrowed $250,000 from a bank, to be repaid in equal monthly instalments over 20 years at an interest rate of 8 per cent per annum. Today, the bank told them that it was introducing a monthly fee of$10 but she could continue to repay the loan by making her current monthly repayments. How much will be increase in Loan repayment tenure

thanks in anticipation

2. Hello, Ganymede!

1. Is it possible that the interest rate can be increased to a level where
the loan term becomes infinite unless the periodic repayment is increased?
It certainly is possible . . . I'll illustrate with a specific example.

We take out a $12,000 loan at 9% to be repaid in 48 equal monthly payments. . . The amortization formula gives us a monthly payment of about$299.

Suppose our bank raises the rate to 29.9% . . . (yike!)
The monthly interest will be: . $\12,000 \times 0.299 \times\frac{1}{12} \;=\;\299$

Our monthly payment covers the interest only;
. . none of it is used to reduce the amount of the loan.

We will always owe them \$12,000 ... and make monthly payments forever.

3. Thanks, Soroban