Kerry borrows $100,000 with a five-year interest-only loan to finance a new business venture. If her interest rate is 5 percent, what is her monthly payment (rounded to the nearest dollar)?

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An interest-only loan requires the borrower to pay only the interest each period. The annual interest is 5% of $100,000, which is $5,000. Dividing this by 12 months gives a monthly payment of $417.

Kerry Borrows $100,000 with a Five-Year Interest-Only Loan to Finance