Refer to Problem 1. For each of the five payment schedules, determine the present worth of the
Question:
Refer to Problem 1. For each of the five payment schedules, determine the present worth of the loan payments made by the borrower. Use an Excel® spreadsheet and program it such that you can enter different interest rates for the borrower’s time value of money (TVOM). Use TVOM rates of 5 percent, 9 percent, and 13 percent.
Refer to problem 1
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
a. Plan 1: Pay the accumulated interest at the end of each interest period and repay the principal at the end of the loan period.
b. Plan 2: Make equal principal payments, plus interest on the unpaid balance at the end of the period.
c. Plan 3: Make equal end-of-period payments.
d. Plan 4: Make a single payment of principal and interest at the end of the loan period.
e. A different plan: Pay \($3\),000 principal at the end of the first year, then \($4\),000, \($5\),000, and \($6\),000 at the end of years 2, 3, 4, plus the accumulated interest at the end of each interest period.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt