a. Chapter 14 Using Excel P14-46 Using Excel for long-term notes payable amortization schedule Patrick's Delivery Services is buying a van to help with deliveries. The cost of the vehicle is $35,000, the interest rate is 6%, and the loan is for three years. The van is to be repaid in three equal installment payments. Payments are due at the end of each year. Requirements 1. Complete the data table. 2. Using the present value of an ordinary annuity table, calculate the payment amount and complete the amortization schedule. Use the effective interest amortization method. Calculate the loan payment by dividing the loan amount by the appropriate present value factor. b. Round values to two decimal places. Calculate the interest expense in the third year as the loan payment minus the loan balance at the beginning of the third year. c. Use absolute cell references and relative cell references in formulas. 3. Using the Excel PMT function, calculate the payment amount and complete the amortization schedule. Use the effective interest amortization method. The PMT function calculates a payment amount that results in a negative number. Reverse this to a positive number for calculations in the amortization schedule. b. Round values to two decimal places. Calculate the interest expense in the third year as the loan payment minus the loan balance at the beginning of the third year. c. Use absolute cell references and relative cell references in formulas. Excel Skills 1. Formulas using both absolute and relative cell references. 2. PMT function a. Excel Hints The PMT function uses the interest rate, the number of periods, and the loan amount (in that order). To calculate the payment amount for a loan of $3,000 at 4% for 5 years, the formula would be =PMT(4%, 5, 3000) ($673.88) 10% Requirement 1 Complete the data table. DATA Loan Amount Interest Rate Periods Requirement 2 Using the present value of an ordinary annuity table, calculate the payment amount and complete the amortization schedule. Use the effective interest amortization method. a. Calculate the loan payment by dividing the loan amount by the appropriate present value factor. b. Round values to two decimal places. Calculate the interest expense in the third year as the loan payment minus the loan balance at the beginning of the third year. C. Use absolute cell references and relative cell references in formulas. Payment (using PV table) Present Value of an Ordinary Annuity of $1 Beginning Principal Interest Period Ending Total Payment 6% 8% Balance Payment Expense Balance 0 1 0.925 1 2 1.8334 1.7833 2 3 2.673 2.5771 3 4 3.4651 3.3121 Total 5 4.21241 3.9927 Requirement 3 Using the Excel PMT function, calculate the payment amount and complete the amortization schedule. Use the effective interest amortization method. a. The PMT function calculates a payment amount that results in a negative number. Reverse this to a positive number for calculations in the amortization schedule. b. Round values to two decimal places. Calculate the interest expense in the third year as the loan payment minus the loan balance at the beginning of the third year. c. Use absolute cell references and relative cell references in formulas. Payment (using PMT function) Beginning Interest Ending Period Total Payment Balance Payment Expense Balance 0 0.9091 1.7355 2.4869 3.1699 3.7908 Principal 1 2 3 Total
