P14-46 Using Excel for long-term notes payable amortization schedule Patricks 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. 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.

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.

Excel Skills

1. Formulas using both absolute and relative cell references.

2. PMT function

QUESTION: How were these calculations were made and want to know the math and the reasoning behind the numbers in the chart. Requirement 2's Chart(Payment) and requirement 3's chart (payment using PMT function

2 payment $13,093.90 period beginning principal interest total ending balance repayment expense repayment balance $35,000.00 1 $35,000.00 $10,993.90 $2,100.00 $13,093.90 $24,006.10 2 $24,006.10 $11,653.54 $1,440.37 $13,093.90 $12,352.56 3 $12,352.56 $12,352.75 $741.15 $13,093.90 ($0.19) $35,000.19 $4,281.52 $39,281.71 total 3 payment using PMT function $13,093.84 period beginning balance principal repayment interest expense total repayment ending balance $35,000.00 $24,006.16 $12,352.68 $0.00 1 $35,000.00 2 $24,006.16 3 $12,352.68 $10,993.84 $2,100.00 $11,653.47 $1,440.37 $12,352.68 $741.16 $35,000.00 $4,281.53 $13,093.84 $13,093.84 $13,093.84 $39,281.53 total