Week_4_Answers

Week_4_Answers - Question 3, Part 1 Solution Rate 9% APR...

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Unformatted text preview: Question 3, Part 1 Solution Rate 9% APR Periods 4 years Payments Interest only annual PV $18,000 FV $0 Year Interest Balance $18,000.00 1 $1,620.00 $19,620.00 ($1,620.00) $0.00 ($1,620.00) $18,000.00 2 $1,620.00 $19,620.00 ($1,620.00) $0.00 ($1,620.00) $18,000.00 3 $1,620.00 $19,620.00 ($1,620.00) $0.00 ($1,620.00) $18,000.00 4 $1,620.00 $19,620.00 ($1,620.00) $0.00 ($1,620.00) $18,000.00 You have decided to purchase a small tract of land for building a new home on the outskirts of town. You have some money available but need a loan of $18,000 to make the purchase. The land will be owner-financed over 4 years with end-of- year payments. The interest rate is 9 percent. Develop an Excel® table to illustrate the payment amounts and schedule for the loan, assuming payback as follows: Method 1. Pay the accumulated interest at the end of each interest period and repay the principal at the end of the loan period. Balance + Interest Interest Payment Principal Payment Total Payment Question 4, Part 2 Solution Rate 9% APR Periods 4 years $4,500.00 annual PV $18,000 FV $0 Year Interest Balance $18,000.00 1 $1,620.00 $19,620.00 ($1,620.00) ($4,500.00) ($6,120.00) $13,500.00 2 $1,215.00 $14,715.00 ($1,215.00) ($4,500.00) ($5,715.00) $9,000.00 3 $810.00 $9,810.00 ($810.00) ($4,500.00) ($5,310.00) $4,500.00 4 $405.00 $4,905.00 ($405.00) ($4,500.00) ($4,905.00) $0.00 You have decided to purchase a small tract of land for building a new home on the outskirts of town. You have some money available but need a loan of $18,000 to make the purchase. The land will be owner-financed over 4 years with end-of-year payments. The interest rate is 9 percent. Develop an Excel® table to illustrate the payment amounts and schedule for the loan, assuming payback follows: Method 2. Make equal principal payments, plus interest on the unpaid balance at the end of the period. Principal Payment Balance + Interest Interest Payment Principal Payment Total Payment Question 5, Part 3 Solution Rate 9% APR Periods 4 years ($5,556.04) annual PV $18,000 FV $0 Year Interest Balance $18,000.00 1 $1,620.00 $19,620.00 ($5,556.04) $14,063.96 2 $1,265.76 $15,329.72 ($5,556.04) $9,773.68 3 $879.63 $10,653.32 ($5,556.04) $5,097.28 4 $458.76 $5,556.04 ($5,556.04) $0.00 You have decided to purchase a small tract of land for building a new home on the outskirts of town. You have some money available but need a loan of $18,000 to make the purchase. The land will be owner-financed over 4 years with end-of-year payments. The interest rate is 9 percent. Develop an Excel® table to illustrate the payment amounts and schedule for the loan, assuming payback follows: Method 3. Make equal end-of-period payments Equal Payments Balance + Interest Interest Payment Principal Payment Total Payment Question 6, Partt 4...
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This note was uploaded on 02/15/2012 for the course MBA 101 taught by Professor X during the Spring '11 term at Shawnee.

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Week_4_Answers - Question 3, Part 1 Solution Rate 9% APR...

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