Question 1: marks: 5

LR borrowed $ 15000 loan at a 14% annual rate compounded monthly which is to be repaid over 5 years.
a. calculate the monthly loan payment.
b. prepare a loan amortization schedule.

PV 15000
i 0.011666666667
n 60
PMT $349.02
period Beg. Balance PMT Interst Princ. Amnt Ending Balance
1 15000 $349.02 175 $174.02 $14,825.98
2 $14,825.98 $349.02 $172.97 $176.05 $14,649.92
3 $14,649.92 $349.02 $170.92 $178.11 $14,471.81
4 $14,471.81 $349.02 $168.84 $180.19 $14,291.63
5 $14,291.63 $349.02 $166.74 $182.29 $14,109.34
6 $14,109.34 $349.02 $164.61 $184.41 $13,924.93
7 $13,924.93 $349.02 $162.46 $186.57 $13,738.36
8 $13,738.36 $349.02 $160.28 $188.74 $13,549.62
9 $13,549.62 $349.02 $158.08 $190.94 $13,358.67
10 $13,358.67 $349.02 $155.85 $193.17 $13,165.50
11 $13,165.50 $349.02 $153.60 $195.43 $12,970.07
12 $12,970.07 $349.02 $151.32 $197.71 $12,772.37
13 $12,772.37 $349.02 $149.01 $200.01 $12,572.35
14 $12,572.35 $349.02 $146.68 $202.35 $12,370.01
15 $12,370.01 $349.02 $144.32 $204.71 $12,165.30
16 $12,165.30 $349.02 $141.93 $207.10 $11,958.20
17 $11,958.20 $349.02 $139.51 $209.51 $11,748.69
18 $11,748.69 $349.02 $137.07 $211.96 $11,536.74
19 $11,536.74 $349.02 $134.60 $214.43 $11,322.31
20 $11,322.31 $349.02 $132.09 $216.93 $11,105.38
21 $11,105.38 $349.02 $129.56 $219.46 $10,885.92
22 $10,885.92 $349.02 $127.00 $222.02 $10,663.90
23 $10,663.90 $349.02 $124.41 $224.61 $10,439.28
24 $10,439.28 $349.02 $121.79 $227.23 $10,212.05
25 $10,212.05 $349.02 $119.14 $229.88 $9,982.17
26 $9,982.17 $349.02 $116.46 $232.57 $9,749.60
27 $9,749.60 $349.02 $113.75 $235.28 $9,514.33
28 $9,514.33 $349.02 $111.00 $238.02 $9,276.30
29 $9,276.30 $349.02 $108.22 $240.80 $9,035.50
30 $9,035.50 $349.02 $105.41 $243.61 $8,791.89
31 $8,791.89 $349.02 $102.57 $246.45 $8,545.44
32 $8,545.44 $349.02 $99.70 $249.33 $8,296.11
33 $8,296.11 $349.02 $96.79 $252.24 $8,043.88
34 $8,043.88 $349.02 $93.85 $255.18 $7,788.70
35 $7,788.70 $349.02 $90.87 $258.16 $7,530.54
36 $7,530.54 $349.02 $87.86 $261.17 $7,269.38
37 $7,269.38 $349.02 $84.81 $264.21 $7,005.16
38 $7,005.16 $349.02 $81.73 $267.30 $6,737.87
39 $6,737.87 $349.02 $78.61 $270.42 $6,467.45
40 $6,467.45 $349.02 $75.45 $273.57 $6,193.88
41 $6,193.88 $349.02 $72.26 $276.76 $5,917.12
42 $5,917.12 $349.02 $69.03 $279.99 $5,637.13
43 $5,637.13 $349.02 $65.77 $283.26 $5,353.87
44 $5,353.87 $349.02 $62.46 $286.56 $5,067.31
45 $5,067.31 $349.02 $59.12 $289.91 $4,777.40
46 $4,777.40 $349.02 $55.74 $293.29 $4,484.12
47 $4,484.12 $349.02 $52.31 $296.71 $4,187.41
48 $4,187.41 $349.02 $48.85 $300.17 $3,887.24
49 $3,887.24 $349.02 $45.35 $303.67 $3,583.56
50 $3,583.56 $349.02 $41.81 $307.22 $3,276.35
51 $3,276.35 $349.02 $38.22 $310.80 $2,965.55
52 $2,965.55 $349.02 $34.60 $314.43 $2,651.12
53 $2,651.12 $349.02 $30.93 $318.09 $2,333.03
54 $2,333.03 $349.02 $27.22 $321.81 $2,011.22
55 $2,011.22 $349.02 $23.46 $325.56 $1,685.66
56 $1,685.66 $349.02 $19.67 $329.36 $1,356.31
57 $1,356.31 $349.02 $15.82 $333.20 $1,023.11
58 $1,023.11 $349.02 $11.94 $337.09 $686.02
59 $686.02 $349.02 $8.00 $341.02 $345.00
60 $345.00 $349.02 $4.02 $345.00 ($0.00)
Question 2: Marks: 3

Rick is considering purchasing an apartment costing $70,000. He will pay 30% down payment and take out a loan for the rema
He wants to choose the offer with the lowest monthly payment.

BANK Interest rate Term

A 3.50% 15
B 3% 20
C 4% 25
D 4.50% 18

a. What are the monthly payments for plans offered by the four bank?
b. Which bank should Rick choose?
Question A
Bank a PV 49000 Pv 49000 Bank c
i 0.002917 i 0.003333
n 180 n 300
PMT $350.29 PMT $258.64

Bank b PV 49000 PV 49000 Bank d

i 0.0025 i 0.00375
n 240 n 216
PMT $271.75 PMT $331.40

Question B
ANS: Rick should choose Bank c as this is lowest monthly payment
ke out a loan for the remainder. He visited several banks for the loan and received the following loan offers.
Question 3: Marks: 2

In order to buy a house you want to accumulate a down payment of $45,000 over the next five years. You can do that
the next 60 months. The account credits interest every month at the annual rate of 6%. What is your required monthly depos

FV 45000
i 0.005
n 60
PMT $641.77
five years. You can do that by putting a certain sum of money in a savings account on the first of every month for
your required monthly deposit?
ery month for