Chapter 5 lecture

# 00 829544 645451 446630 231904 payment 250456 250456

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Unformatted text preview: ayment – We can use PMT function to get the loan We payment payment – Example: • We pay off a \$10,000, 8% loan in five annual We payments payments 30 Amortization Tables 31 Amortization Tables Once we know the payment, we can set up the Once table: table: end of year 1 2 3 4 5 balance \$ 10,000.00 \$ 8,295.44 \$ 6,454.51 \$ 4,466.30 \$ 2,319.04 payment (\$2,504.56) (\$2,504.56) (\$2,504.56) (\$2,504.56) (\$2,504.56) interest \$ (800.00) \$ (663.63) \$ (516.36) \$ (357.30) \$ (185.52) principal (\$1,704.56) (\$1,840.93) (\$1,988.20) (\$2,147.26) (\$2,319.04) 32 Another Amortization Another Problem Problem – Joe is just buying a house for \$200,000 – He is getting a 30-year mortgage for He \$180,000 w/ 6% annual interest rate \$180,000 – What is his monthly payment? – How much interest will he pay during the How first year? first Reference (Another Example): Reference File: OtherPracticeProblems_Chp5.xls File: Worksheet: “Amortization” 33 How long will it take to pay How off a loan? off – Assume you borrow \$10,000 and you want Assume to make annual payments of \$2,000 to pay it off it – The interest rate on the loan is 7.5% – How long does it...
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