Tasks:

Each proposal consists of five characteristics:

• Down Payment: This is the fraction of the price of the home that your client pays immediately and thus does not borrow. It is expressed as a percentage of the total home price; for instance, if the price of the home is $200,000 and the down payment percentage is 10%, the down payment amount is $20,000.
• Interest Rate/yr: This is the cost of borrowing the money and is expressed as a percentage per year of the outstanding balance. Note that while the interest rate is quote as an annual amount, interest on home mortgages is typically compounded monthly.
• Duration (yrs): The length of the mortgage loan. This is expressed in years, though interest is compounded monthly.
• Points: One-time fees charged by the bank in order to borrow at the interest rate. These are expressed as a percentage of the amount borrowed and are computed by multiplying the points (calculated as a percentage so 1 points is equal to 1% of the loan value).
• Fees: One-time processing fees that are charged by the bank in addition to the amount borrowed.

Answer the following questions beginning in row 12 of the Loan Details worksheet:

1. How much in total interest was paid during the life of option 1?
2. True or False: You will pay more in total interest during the life of Option 1 then you will pay in principle? Explain your answer.
3. How much in total interest was paid during the life of option 2?

Loan Analysis Worksheet
Purchase Price		$350,000
Option #	Down Payment	Nominal Interest Rate/yr	Duration (yrs)	Points	Fees	Loan Value	Actual Amount Borrowed	Monthly Payment
1	10%	6.25%	30	1	400
2	5%	6.75%	30	0	0
1.
2.
3.
4.
	Answer 4 Calculation		Option 1		Option 2
		Points and Fees
		Interest Paid (24 months)
		Interest Paid (360 months)
		Total 24 Months	$ -		$ -
		Total 360 Months	$ -		$ -
5.	d
6.	d
7	Option #1
	Option #2
	Ethics Answer:

Notes. To prepare the mortsheet, develop fummulas for payment 1, then copy down to the maximum number of payments. Absolute vs. Relative cell references play a big part here. Think about what cells to freeze before you fill them For each row, Monthly Payment=Interest - Principle. Across different rous, the Monthly Payment remains constant but the Interest and Principle will be different The interest rate needs to be adjusted for monthly compounding. Check figure the outstanding balance after the 10' payment for option lis 16,456.64 and far opsion 2 is $329,503.68. The Outstanding Balance after the last payment is applied should be $0. Below is an example with different figures. Do not use these for your project. These are for reference only. If you get stud try to build fomnialas ar make calculations that match this table. Consider the following assumptions: Amount Borrowed: 200.000 Interest Rate: 69% Tem 30 Years Marthly Payment constant, computed by PNT, function, adjusting for monthly compounding, The first few TOWS would look like this: Number Lonthly Payment Principle Interest $1.199.10 $1,199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 + or a $199.10 $200.10 $201.10 5202.10 5203.11 $204.13 5205.15 $206.17 Outstanding Balance $200.000.00 $199.800.90 $199,600.20 $199,399.71 $199.197.60 S198,994.49 $198.79036 $198.585121 $198.9 79.04 $1.000.00 5999.00 $998.00 $997.00 $995.99 5994.97 $993.95 $992.93 8 Analysis: Anger the following questions beginning in tot 12 of the Loan Details worksheet: How much in tatal interest wag paid during the life of aption 12 Notes. To prepare the mortsheet, develop fummulas for payment 1, then copy down to the maximum number of payments. Absolute vs. Relative cell references play a big part here. Think about what cells to freeze before you fill them For each row, Monthly Payment=Interest - Principle. Across different rous, the Monthly Payment remains constant but the Interest and Principle will be different The interest rate needs to be adjusted for monthly compounding. Check figure the outstanding balance after the 10' payment for option lis 16,456.64 and far opsion 2 is $329,503.68. The Outstanding Balance after the last payment is applied should be $0. Below is an example with different figures. Do not use these for your project. These are for reference only. If you get stud try to build fomnialas ar make calculations that match this table. Consider the following assumptions: Amount Borrowed: 200.000 Interest Rate: 69% Tem 30 Years Marthly Payment constant, computed by PNT, function, adjusting for monthly compounding, The first few TOWS would look like this: Number Lonthly Payment Principle Interest $1.199.10 $1,199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 $1.199.10 + or a $199.10 $200.10 $201.10 5202.10 5203.11 $204.13 5205.15 $206.17 Outstanding Balance $200.000.00 $199.800.90 $199,600.20 $199,399.71 $199.197.60 S198,994.49 $198.79036 $198.585121 $198.9 79.04 $1.000.00 5999.00 $998.00 $997.00 $995.99 5994.97 $993.95 $992.93 8 Analysis: Anger the following questions beginning in tot 12 of the Loan Details worksheet: How much in tatal interest wag paid during the life of aption 12