Refer to Problem 3. For each of the five payment schedules, determine the present worth of the
Question:
Refer to Problem 3. For each of the five payment schedules, determine the present worth of the loan payments made by the borrower. Use an Excel® spreadsheet and program it such that you can enter different interest rates for the borrower’s TVOM. Use TVOM rates of 7 percent, 12 percent, and 17 percent compounded quarterly.
Refer to problem 3
J&J Cattle has purchased a quarter section of land for \($160\),000. They make a down payment of \($20\),000, and the remainder of the purchase price (\($140\),000) is financed at 12 percent compounded quarterly with quarterly payments over 2 years. Develop an Excel® table to illustrate the payment amounts and schedule for the loan, assuming payback follows
a. Plan 1: Pay the accumulated interest at the end of each interest period and repay the principal at the end of the loan period.
b. Plan 2: Make equal principal payments, plus interest on the unpaid balance at the end of the period.
c. Plan 3: Make equal end-of-period payments.
d. Plan 4: Make a single payment of principal and interest at the end of the loan period.
e. A different plan: Pay off the principal per the table below. In addition, pay the accumulated interest at the end of each interest period.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt