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Prepare a monthly payment schedule for each loan below using Excel, and submit it. ADD ON LOAN: Monthly payment = (4500+4500*18%*5)/60 = $ 142.50 Answer

Prepare a monthly payment schedule for each loan below using Excel, and submit it.

ADD ON LOAN:

Monthly payment = (4500+4500*18%*5)/60 =

$ 142.50

Answer

Total amount of interest = 4500*18%*5 =

$ 4,050.00

Answer

True interest rate:

It is the IRR of the resulting cash flows.

We have

4500 = 142.5*PVIFA(irr/12,60)

31.5790 = PVIFA(irr/12,60)

The value of irr has to be found by trial and error.

Using an online calculator

for irr/12 = 0.024, the interest factor = 31.6253

for irr/12 = 0.025, the interest factor = 30.9087

The exact value of irr/12 = 0.024+0.001*(31.6253-31.5780)/(31.6253-30.9087) =

2.41%

IRR = 0.024066*12 =

28.88%

Answer

COMPOUND INTEREST LOAN:

Using the formula for loan amortization

Monthly payment = 4500*(0.18/12)*(1+0.18/12)^60/((1+0.18/12)^60-1)) =

$ 114.27

Answer

Total amount of interest = 60*114.27 -4500 =

$ 2,356.20

Answer

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