1. Suppose you deposit $200 at the end of each month for the duration of 12...
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1. Suppose you deposit $200 at the end of each month for the duration of 12 years in an account with an annual interest rate of 2.48% compounded quarterly. How much money will you have at the end of the 12 years? Create an annuity table that shows the account balance at the end of each month even though the compounding period is quarterly. Note: This is tricky since the periodic payments are made each month but the compounding period is quarterly (every 3 months). You will have to think about how to modify the annuity table in order to get the correct answer. Account Value after 12 years = 2. Add, or copy, a sheet at the end of your book and rename it "L2 #2". Electronically sign by typing ='L1 Answer Sheet'! A1 in D1. Answer the following questions by creating an amortization schedule for the following loan. You obtain a $150,000 home loan for 30 years at 6.4% interest compounded monthly. (a) How much interest will be paid over the life of this loan? (b) What is the loan balance after 6 years i.e. after the 72nd payment? (c) Because you can afford it you decide to pay an extra $250 per period starting with the 151st payment. Modify your amortization schedule to account for these increased payments. By doing this, the last payment will occur in which period? How much is the last payment? (d) How much money in interest is saved over the life of the loan by paying the extra $300 per period? 3. Add, or copy, a sheet at the end of your book and rename it "L2 #3". Electronically sign by typing ='L1 Answer Sheet'!A1 in D1. Suppose that after 10 years you are able to refinance the loan in problem 2 at a lower interest rate. Create an amortization schedule using the loan balance for the original loan after 10 years of $126,843.58. Assume you refinance this amount for 20 years at 4.3% compounded monthly. (a) What are the monthly payments? (b) How much interest is saved overall by refinancing? Assume no extra payments were made on either the original or the refinanced loan? 1. Suppose you deposit $200 at the end of each month for the duration of 12 years in an account with an annual interest rate of 2.48% compounded quarterly. How much money will you have at the end of the 12 years? Create an annuity table that shows the account balance at the end of each month even though the compounding period is quarterly. Note: This is tricky since the periodic payments are made each month but the compounding period is quarterly (every 3 months). You will have to think about how to modify the annuity table in order to get the correct answer. Account Value after 12 years = 2. Add, or copy, a sheet at the end of your book and rename it "L2 #2". Electronically sign by typing ='L1 Answer Sheet'! A1 in D1. Answer the following questions by creating an amortization schedule for the following loan. You obtain a $150,000 home loan for 30 years at 6.4% interest compounded monthly. (a) How much interest will be paid over the life of this loan? (b) What is the loan balance after 6 years i.e. after the 72nd payment? (c) Because you can afford it you decide to pay an extra $250 per period starting with the 151st payment. Modify your amortization schedule to account for these increased payments. By doing this, the last payment will occur in which period? How much is the last payment? (d) How much money in interest is saved over the life of the loan by paying the extra $300 per period? 3. Add, or copy, a sheet at the end of your book and rename it "L2 #3". Electronically sign by typing ='L1 Answer Sheet'!A1 in D1. Suppose that after 10 years you are able to refinance the loan in problem 2 at a lower interest rate. Create an amortization schedule using the loan balance for the original loan after 10 years of $126,843.58. Assume you refinance this amount for 20 years at 4.3% compounded monthly. (a) What are the monthly payments? (b) How much interest is saved overall by refinancing? Assume no extra payments were made on either the original or the refinanced loan?
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Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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