Problem #1 (5 points)

Recently you purchased a nice car for $52,000 on January 1, 20x1.

The dealer asked you to $2000 down and offered you financing for the remaining. The condition of the financing was as follows:

1. Total period was 7 years.

2. Interest rate is 1.9%

3. Your payment should be at the end of each month.

Required to calculate your monthly payments using the appropriate time value of money provided for you at attached documents and also posted on the blackboard. You must prepare the following the schedule in Excel and fill in the numbers. Make sure DO NOT type the numbers and rather transfer the cells.

Schedule of Loan Amortization

#of Period in years ?

# of period in months ?

Interest rate per year ?

Interest rate per month ?

Period Payments Interest Principle Balance

1/1/X1 ----- ------ ------ $50,000

1/30/X1

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Problem #2 (10 points)

Lincoln Corporation Issued $10,000,000 with the following codition:

Period of the bond 30 years.

Stated interest rate is 10%

Effective (market) rate is 12%

Interest is paid at the end of each year.

Calculate price of the bond using appropriate present value formula available to you and then prepare the following schedule on an Excel spreadsheet.

Schedule of Bond Amortization

Period Payments Interest Principle Book Value

1 ----- ------ ------ $ ?

2

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30