How much interest income will I make If I reinvest my returns?

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If I lend out $5000 dollars at 30% to a person for 5 years. They pay me back monthly. If I relend out the entitre repayment amount (Principal + interest) every month to a new borrower with a term that will not take me past the term end date of the first borrower how much mony will I make at the end of the five years?

I will also relend out the reapayments from all the new borrowers every month. For borrower applying towards the end what will I make if I set the minimum loan period to be no less than 12 months? What If I set it to 1 month how much will I make in total?

How much interest income will I make If I reinvest my returns?

it is going to be difficult to type all the prosses so her is how you start and you try to figure out the rest:

assuming 30% is nominal annual rate compounded monthly you have 2.5% monthly rate

period is 5 years = 60 month

now you have you need to find the monlthy payment which you you could do using financial cal (if you need fourmela let me know)

N = 60

I = 2.5

PV= 5000

FV = 0

PMT =??? = 161.767

you are going to lend this payment out, which is just like saying you are going to reinvest the payment at compounded intrest rate of 2,5% a month (that is investing the orginal repayment its and the new loan(s) repayment(s))

so her is how the future value of the reinvestmet that looks like mathmaticly:

161.767(1+.025)^59 +161.767(1.025)^58+.......+116.767=

using the geometric series you simplify that mess and youo get something that looks like this

161.767 (1-(1.025)^59)/(1-(1.025)= $21304.5703

so your $5000 will grow to $21304.57

instead of being $21998.95 if you did not reinvested the repayment

How much interest income will I make If I reinvest my returns?

What are you? A loan shark?

How much interest income will I make If I reinvest my returns?

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