Jolly Dolly Cupcakes has a tough time meeting the demand for cupcakes. Not only has Dolly been the talk of the town, several newspapers of nearby towns have written articles and folks from neighboring counties are stopping by with newspaper clippings in hand anxious to try out the cupcakes. The elementary and middle schools in the area have asked her if she would like to bake cupcakes for school functions. While business is great, Dolly’s current equipment does not have the capacity to meet the current demands. She is seriously considering upgrading her equipment at a cost of $30,000. You go with her to several different banks to discuss financing options. Bank # 1 proposes a loan amount equal to the cost of the equipment with an interest rate of 4.5% and a term of 5 years. Bank # 2 proposes a loan amount equal to equipment cost, a term of 10 years with an interest rate of 5.25%. Payments are to be made monthly for each loan. Dolly needs your help in calculating the monthly loan payment and evaluating the loan packages.

Write a memo to Dolly with your evaluation of the 2 different loan packages. Include in your analysis a description of each loan including the monthly loan payment, the total

Answer rating: 100% (QA)

The purpose of this memo is to evaluate the two different loan packages available The first ... View the full answer