Build a short-term loan model, allowing terms out to 5 years. Take the term, annual interest rate, and principal balance as inputs. Either calculate the required payment or use a payment input cell. Use your model to answer the following questions:

- with a term of 5 years and a rate of 5%, what should payments be for a $10,000 loan

- how many months will it take to pay off the loan if payments are $1,000

- if all payments but the last payment are $1,000, how much should be paid off in the last month to leave $0 due?

Add a discount factor to your model. Use another input for the appropriate opportunity cost of capital.

- what is the PV of the payments if the discount rate is 5%

- what is the loan's NPV to the customer if the discount rate is 4%? 6%?

Answer rating: 100% (QA)

Answer i Loan amount 10000 Interest rate 5 Number of years 5 Equal monthly installament EMI EMI P X ... View the full answer