finance 199 term project

# finance 199 term project - Interest Principle Balance 1(2...

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12/3/07 Finance 199 Term Project Doug Metzger Year Payment Interest Principle Balance 1 \$11,347.67 \$9,500.00 \$1,847.67 \$98,152.33 2 \$11,347.67 \$9,324.47 \$2,023.20 \$96,129.13 3 \$11,347.67 \$9,132.27 \$2,215.40 \$93,913.73 4 \$11,347.67 \$8,921.80 \$2,425.87 \$91,487.86 5 \$11,347.67 \$8,691.35 \$2,656.32 \$88,831.54 6 \$11,347.67 \$8,439.00 \$2,908.67 \$85,922.87 7 \$11,347.67 \$8,162.67 \$3,185.00 \$82,737.87 8 \$11,347.67 \$7,860.10 \$3,487.57 \$79,250.30 9 \$11,347.67 \$7,528.78 \$3,813.89 \$75,431.41 10 \$11,347.67 \$7,165.98 \$4,181.69 \$71,249.72 Original Loan Using the formula, = -[ + \$due 1 1 it - + 11 in - 1 Loan , the total due on the original loan at time of payoff is \$71,249.72. Let’s check that using an amortization schedule: Refinanced Loan Again, using the formula, = -[ + \$due 1 1 it - + 11 in - 1 Loan , the total due on the refinanced loan at time of payoff is \$69,489.81. Let’s check this value using an amortization schedule again: Year Payment

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Unformatted text preview: Interest Principle Balance 1 (2) \$10,590.77 \$8,342.95 \$2,247,82 \$95,904.51 2 (3) \$10,590.77 \$8,151,88 \$2,438.87 \$93,465.62 3 (4) \$10,590.77 \$7,944.58 \$2,646.19 \$90,819.43 4 (5) \$10,590.77 \$7,719.65 \$2,871.12 \$87,948.31 5 (6) \$10,590.77 \$7,475.61 \$3,115.16 \$84,833.15 Finance 199 Term Project Doug Metzger 6 (7) \$10,590.77 \$7,210.82 \$3,379.95 \$81,453.20 7 (8) \$10,590.77 \$6,923.52 \$3,667.25 \$77,785.95 8 (9) \$10,590.77 \$6,611.81 \$3,978.96 \$73,806.99 9 (10) \$10,590.77 \$6,273.59 \$4,317.18 \$69,489.81 The difference between these payments is \$1,759.91. Using the equation for Present Value, the internal rate of return on the cost to refinance (\$2,944.57) can be determined. , . ( + ) = , . \$2 944 57 1 i 9 \$1 759 91 Solving for i , the internal rate of return, the answer is 5.89%....
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finance 199 term project - Interest Principle Balance 1(2...

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