You are considering purchasing a car with a sticker price of $30,000 (nonnegotiable and no trade in.) You wish to make monthly payments for five years. The most you can afford to pay is $650 a month (payments made at the end of the month). The credit union has agreed to loan you the money at a 4.90% interest rate. Can you afford the car? o

• Use =pmt. Make sure you answer whether you can afford the car.

Create two loan amortization spreadsheets.

• One which shows a loan amortization table for the amount the bank wants you to pay (=pmt)
• One which shows a loan amortization table for the actual $650 you can afford to pay (maximum payment.)

Use the format template below.

When you create the table for the $650 monthly payment, if the table is not adjusted, you will end up with a negative loan balance since you will pay the loan off early.

• Creating an IF statement to determine what the last payment needs to be so that you do not have a negative balance. Put this IF statement in the entire range of cells in the monthly payment column and make sure that it works so that payments after this one will be zero and payments prior to this one will be $650. Use cell references in your IF statement (do not use trial and error to put a hard-coded number into the IF statement.)

Annual interest rate

Number of years

Asset cost

Bank payment

Maximum payment

Afford the car?

Month Monthly Payment Interest Principal Reduction Remaining Balance