The problem$-$solving videos are intended as a resource to help you understand what each of

the problems seeks to accomplish. After viewing, simply follow the step$-$by$-$step instructions

outlined below to guide you in solving your assignment. Note that although the online

calculators that are used in these assignments may differ from those that were used in the

videos, your step$-$by$-$step instructions will take that into account.

$1.$

Video $2\mathrm{.}2-$ Your Assignment $($There are $5$ Parts to this problem$)$

Suppose the bank agrees to lend you $$23,750$ at $7\%$ interest for $10$ years. Using this online

calculator, solve for the following:

$($A$)$ The monthly payment amount

$($B$)$ The total amount of interest that you$$d end up paying over the $10$ years.

$($C$)$ The date of the last payment. $($Let the $$Mortgage Start Date$$ remain on today$$s date

at the start.$)$

$($D$)$ The consequences of adding $$50$optional extra payment$$ to each of your monthly

payments. Specifically:

$($a$)$ Does the last payment date change? If so$,$ by how many months?

$($b$)$ What would the total amount of interest paid under the loan become?

$($E$)$ What conclusions can you draw from this example?

$$ M$.$D$.$ Weiss LLC$.$ All rights reserved.

$12$

The steps to solving this problem are as follows:

$1.$ FOR PARTS A$,$ B AND C:

a$.$ Click on the $$Loan Amount$$ and enter $23750($the calculator will add the dollar

sign and comma$)$

b$.$ c$.$ d$.$ Click on the $$Loan Term$$ and use the drop$-$down menu to enter $10($years$)$

Click on the $$Interest rate$$ and enter $7(\%)$

Click the tab button on your keyboard and use the $$Loan start date$$ that is

automatically selected by the calculator $($which should be the current date$)$

e$.$ The solutions to PARTS A$,$ B and C will be automatically displayed

$2.$ FOR PART D:

a$.$ Click on the highlighted $$Optional: Make extra payments$$ link dropdown below

your input boxes

b$.$ Enter $50$ in the $$Additional amount to monthly payment$$ box

c$.$ Tab down and you will see the answers to Part D $($a$)$ and $($b$)$

$3.$ FOR PART E:

Explain your conclusions

$2.$

Video $2\mathrm{.}3$ Your Assignment $($There are $4$ Parts to this problem. Note that Parts A$,$ B and C

require the specific APR that you will have calculated using the calculator and Part D requires

an answer as well$)$

Suppose you needed to borrow $$22,500$ for five years $(60$ months$).$ You checked online and

realized there are all kinds of alternatives that competing lenders are offering. Some have

lower interest rates but charge up$$front fees. Others have higher interest rates but charge

smaller up$-$front fees, or no fees at all. Using this APR calculator, calculate the Annual

Percentage Rates for each of the following loan offers and decide which you would choose.

Be sure to take into consideration your ability to fund the amount of up$-$front money, versus

the value of what could be a lower monthly payment for the term of the loan.

$($A$)7\%$ interest rate plus a total of $$375$ in fees

$($B$)7\mathrm{.}5\%$ interest rate plus $$275$ in fees

$($C$)7\mathrm{.}75\%$ interest rate plus $$225$ in fees

$$ M$.$D$.$ Weiss LLC$.$ All rights reserved.

$13$

$($D$)$ Which would you choose and why?

The steps to solving this problem are as follows:

$1.$ Click on the APR calculator

$2.$ FOR PART A:

a$.$ enter $22500$ in the $$Loan Amount$$ box

b$.$ Enter $375$ in the $$Extra Cost$$ box

c$.$ Enter $7$ in the $$Interest Rate $\%$ box

d$.$ Enter $60$ in the $$No$.$ of Months$$ box

e$.$ Click on $$Calculate$$ and the solution to Part A will appear in red on the right$-$

hand side

$3.$ FOR PARTS B AND C:

Repeat these steps by substituting the interest rate and fee values and press

$$Calculate Again$$ for the updated APR solutions

$3.$

Video $2\mathrm{.}4$ Your Assignment $($There are $2$ Parts to this problem$)$

Suppose you and your significant other are shopping for furniture. After haggling a bit, the

salesperson is attempting to close the sale with his $$special$$ offer of $$14,600,$ no money down

and no payments for $3$ years. The two of you are pretty tempted, that is$,$ until you remember

that there is no such thing as an interest$-$free loan. After doing a bit of research, you$$ve

determined that your bank would charge $7\mathrm{.}5\%$ interest to lend you the money for this

purchase. So$,$ you decide to use this Time Value of Money calculator to use that information to

determine the $$real$$ cost of your purchase.

The steps to solving this problem are as follows:

$1.$ FOR PART A:

a$.$ b$.$ Click on the above$-$referenced link

Enter $14600$ in the $$Future Value$$ box because that$$s the amount that will be due

later

$$ M$.$D$.$ Weiss LLC$.$ All rights reserved.

$14$

c$.$ Enter $7\mathrm{.}5$ in the $$Annual Rate$$ box because that$$s what it would cost for the bank

loan

d$.$ e$.$ Enter $3$ in the $$Periods$$ box because you$$ll have $3$ years to pay for your purchase

Click on the dropdown menu for $$Compounding$$ and select $$Annually$$ because

we are making the assumption that interest will only be compounded $1$x per year

f$.$ Click the $$PV$$ button, which is the $$Present Value$$ of today$$s cash and your

solution to Part A will automatically appear. Note that there will be a $$minus$$ sign

in front of that number. That$$s because the payment of cash means that you$$re

$$giving up$$ some of