Sally plans on borrowing $10,000 now and at the start of each of the next three years to fund her education. After graduation, Sally will repay the loan in 120 equal monthly installments. During her college years, interest accrues yearly and is 4% per year. After she graduates, the interest rate jumps to 6% and compounds monthly.
Required:
a. Use the FV function in Excel to compute Sally's total balance at the end of four years. This balance would include the amount borrowed and the accrued interest.
b. Use the PMT function in Excel to compute Sally's monthly payment at the end of four years, when she graduates. Note that this repayment begins in month 49 and continues until month 168.