I need to calculate how much I can borrow if I am paying $6000 per
month in interest @6% over a 12 month period.

Interest = Principal X Rate X Time
6000 = P X .06 X 1
You have an annual interest rate, so the time is 1 (12 months)
6000 = .06P
6000/.06 = P
P = $100,000

Some of your wording was not exactly correct, but I assumed this is
the problem you had in mind.

Since your wording is a little bit contradictory, my comment may not
be what you need, just so you know.  You write that you are paying
"per month" "over a 12 month period".

Yes I am working backwards here. Sorry if it is confusing.
I have a budget that allows me to pay $6000 per month in interest
charges that will be calculated @6%. It is a floor plan credit line
for an auto dealership. I trying to determine how much cash I will
have to work with each month.
Basically I will be paying $72,000 per year in interest.

I'm assuming that you are asking how much inventory you can have for
the money that you have available for interest.  Try this.

You have said that you can pay $72,000.00 per year in interest, so
let's use the formula suggested by research_help-ga.

Using the formula:   Interest = Principal X Rate X Time, then:

$72,000 = P X 0.06 X 1
so,
72,000 = 0.06P
so,
72,000 / 0.06 = P
P = $1,200,000.00

So the principal on the loan is $1,200,000.00, but this is a floor
plan arrangement, so the principal is never reduced. That means that
your 'average daily principal' (if you're paying interest only) is
$1,200,000.00.

Look at it another way:

If you're paying $72,000.00 per year in interest, then $72,000 divided
by 365 days in the year equals $197.26 per day interest. Let's round
it off to $200.00.   So, how much inventory (principal) makes for
$200.00 per day in interest?  Let's say your average daily inventory
was $1.00.  This will help you find how much interest per day that you
pay per dollar of inventory.    Divide $1.00 by $200.00 and you get
$0.005 interest per day per dollar of inventory.  So, $0.005 divided
by $6000.00 (what you can pay per month) equals $1,200,000.00 of
average daily inventory.

I think you can keep $1,200,000.00 in average daily inventory.

Disclaimer:  I could be wrong.  Why don't you call a bank that
provides floor plan and ask them to figure it for you?  Good luck.

Hi,
I am assuming that your loan is only for 12 months.Given that, your
monthly payment of $6000 contains both pricipal and interest. Based on
that you will be able to get a loan of $69714.

The formula to use is

A= P(1+r/1200)power n, where n is months.

So if you were to have only 1 monthly payment of 6000, then you can borrow :

6000 =P(1+ 6/1200) => P = 6000/1.005 =5970

So, for a 12 month loan repayment , you can borrow

 A      n      (1 +6/1200) P
6000	1	1.005	5970.149254
6000	2	1.005	5940.447019
6000	3	1.005	5910.892556
6000	4	1.005	5881.48513
6000	5	1.005	5852.22401
6000	6	1.005	5823.108468
6000	7	1.005	5794.137779
6000	8	1.005	5765.311223
6000	9	1.005	5736.628082
6000	10	1.005	5708.087644
6000	11	1.005	5679.689198
6000	12	1.005	5651.432038

The total Principal you can borrow is $69713.59

regards

I think Whuffo-ga understood the problem correctly and calculated the
correct principal.  I don't know how quickly the interest rate on a
floor plan loan can be changed, but if it were to increase to 8%, at $
6000/month, you could then only maintain an inventory of $ 900,000.