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Vanna has just financed the purchase of a home for $200 000. She agreed to repay the loan by making equal monthly blended payments of
Vanna has just financed the purchase of a home for $200 000. She agreed to repay the loan by making equal monthly blended payments of $3000 each at 4%/a, compounded monthly. (15)
- Create an amortization table using a Microsoft Excel spreadsheet. In your answer include all the formulas used.
- How long will it take to repay the loan?
- How much will be the final payment?
- Determine how much interest she will pay for her loan.
- Use Microsoft Excel to graph the amortization of the loan (Hint: Graph outstanding principal vs. month)
- How much sooner would the loan be paid if she made a 15% down payment?
- How much would Vanna have saved if she had obtained a loan 3%/a, compounded monthly?
- Write a concluding statement about the importance of interest rates and down payments when taking out loans.
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