This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
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 ownerfinanced over 4 years with endof 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 ownerfinanced over 4 years with endofyear 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 ownerfinanced over 4 years with endofyear 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 endofperiod payments Equal Payments Balance + Interest Interest Payment Principal Payment Total Payment Question 6, Partt 4...
View
Full
Document
This note was uploaded on 02/15/2012 for the course MBA 101 taught by Professor X during the Spring '11 term at Shawnee.
 Spring '11
 X
 Finance

Click to edit the document details