Max Points: 5.0

In Chapter 1 of the text (1-13) you will look at calculating a monthly payment for a loan. A simpler problem is to compute the amount a loan would cost you in one month.

Using information from an internet source, determine the current interest rate a credit card or loan. Suppose you borrow $1,000 (or spend $1,000) on a credit card. How much will you owe in one month? 6 months if you pay nothing for 6 months?

Compute the 6 month cost in two ways:

1. Make 6 monthly computations. Enter these as formulas in a spreadsheet. (The goal here is really getting you to use spreadsheets and formulas for computations.)
2. Use the formula, A= 1000*(1 + r)^(N) where N = the number of periods (6) and r = the periodic interest rate = APR/12, where APR is the annual percentage rate.

A Microsoft Excel spreadsheet is required for this DQ.

ou need to submit an Excel sheet with these computations. You should have

1) A table with the amount owed at the end of month, 1, 2, 3, 4, 5, and 6.

2) Then you should also compute the amount owed at 6 months using the formula provided.

Make sure to use formulas in your Excel sheets, if you do not, then I will ask you to redo the work until you get it correct.

See the files InitialExcelHelp and ExamplesForStudents in the Excel Help forum for examples and some practice. Also see the YouTube site, there are a couple of videos on using formulas in Excel.

Your response should look something like: (See attached file for a better picture.)

APR	12.50%
Principal (P)	{postTextValue}nbsp; 1,000.00
Compoundings/Year (n)	12
Periodic Rate ( r)	1.042%
Number of periods (n)	6
Month	Beginning Balance	Interest	New balance
1	$1,000.00	$10.42	$1,010.42
2	$1,010.42	$10.53	$1,020.94
3	$1,020.94	$10.63	$1,031.58
4	$1,031.58	$10.75	$1,042.32
5	$1,042.32	$10.86	$1,053.18
6	$1,053.18	$10.97	$1,064.15
A(6) = P(1 + r)n =	$1,064.15

Everywhere you see bold there should be a formula used in the calculation. Here are what the formulas look like for this example

APR	0.125
Principal (P)	1000
Compoundings/Year (n)	12
Periodic Rate ( r)	=B1/B3
Number of periods (n)	6
Month	Beginning Balance	Interest	New balance
1	=B2	=B7*$B$4	=C7+B7
2	=D7	=B8*$B$4	=C8+B8
3	=D8	=B9*$B$4	=C9+B9
4	=D9	=B10*$B$4	=C10+B10
5	=D10	=B11*$B$4	=C11+B11
6	=D11	=B12*$B$4	=C12+B12
A(6) = P(1 + r)n =	=B2*(1+B1/B3)^6

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