Question
Case 1. Car Sam can afford to spend $750 per month on a car. He figures he needs half of it for gas, parking, and
Case 1. Car
Sam can afford to spend $750 per month on a car. He figures he needs half of it for gas, parking, and insurance. Sam has been to the bank, and they will loan him 100% of the car's purchase price.
a) If his loan is at a nominal 12% annual rate over 36 months, what is the most expensive car he can purchase?
b) The car he likes costs $20,000 and the dealer will finance it over 60 months at 12%. Can he afford it? If not, for how many months will he need to save his $750 per month?
c) What is the highest interest rate he can pay over 60 months and stay within his budget if he buys the $20,000 car now?
Case 2. Mortgage
a) Assume mortgage payments of $1100 per month for 30 years and an interest rate of 0.5% per month. What initial principal or PW will this repay?
b) Assume annual mortgage payments of $13,200 for 30 years and an interest rate of 6% per year. What initial principal or PW will this repay?
c) Assume annual mortgage payments of $13,200 for 30 years and an interest rate of 6.168% per year. What initial principal or PW will this repay?
To-Do:
MS Excel Tables (those also have to be turned in!)
Graphs: For each case (car/mortgage) at least one graph, which you can use to back up your discussion. For example, plot the interest payment + principal payment + balance.
Discussion of results: Minimum 250 words for each case (car/mortgage). Answer the questions: Why do the values from a), b), and c) differ? What else have you learned?
Submit one MS Excel document with your calculations and one MS Word document with your discussion and the graphs. Therefore you have to upload TWO documents!
***i do not have too much experience with excel so if this can please be shown with that!! Please and thank you!! With the excel formulae as well please!
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