A

QUESTIO
1 N:
You
borrow
USD
10,000
for 10
months
with
annual
interest
rate of
8%.Find
the
following
2 :
1.
Monthly
payment
3 s

2.
Principal
amount,
interest
and
balance
paid each
4 month
3. Find
the
monthly
payment
in the
case
where
the
payment
is paid at
the
beginnin
g of the
5 month
4. Find
the
montlhy
payment
when you
need to
pay
$1000 at
the end
of 8
6 months
7
SOLUTIO
8 N:
9
PMT,PPMT,IPMT Functions
10
CUMPRINC CUMIPMT
11

rate
months
loan amount

This is 8%/12
0.006666667 payment
10 end of month
$ 10,000.00

$1,037.03

12
Beginning
Monthly
balance
Payment
Principal
1 $ 10,000.00
$1,037.03
2
$9,029.63
$1,037.03
3
$8,052.80
$1,037.03
4
$7,069.45
$1,037.03
5
$6,079.55
$1,037.03
6
$5,083.05
$1,037.03
7
$4,079.90
$1,037.03
8
$3,070.07
$1,037.03
9
$2,053.51
$1,037.03
10
$1,030.16
$1,037.03

13
14
15
16
17
18
19
20
21
22
23
24

Time

25

NPV of payments

cum int months 2-4 cumprinc months 2-4

27

payment
beginning of
each month

28

monthly payment
if we make $1000
ending payment

30

(loanprincipal
60.20 payment)
Ending
Balance
$66.67
$9,029.63 ppmt=per month principal payment
$60.20
$8,052.80
$53.69
$7,069.45
$47.13
$6,079.55
$40.53
$5,083.05
$33.89
$4,079.90
$27.20
$3,070.07
$20.47
$2,053.51
$13.69
$1,030.16
$6.87
($0.00)

$10,000.00

26

29

Interest
$970.37
$976.83
$983.35
$989.90
$996.50
$1,003.15
$1,009.83
$1,016.56
$1,023.34
$1,030.16

nper=number of period

$1,030.16

$940.00
940 also
along the
final payment
fv= fixed
value at the
end

-161.0125862

-2950.083682

simillarily cumiprinc

type=1 beginning of the month

cumipmt=cumulative interest
payment for some month

pv =principal value
loan that u get is treated as -ve

remember the negative sign

A
B
C
D
1 Find the present value for the following 3 cases:
Rate of
2 Interest
12%
Pay
$3000 for
5 years
end of
3 year
$10,814.33
Pay
$3000 for
5 years
beginnin
4 g of year $12,112.05
Extra
$500
payment
end of
year
5;end of
year
5 payments $11,098.04

Find the maximum rate that you can handle when you borrow $80000 and pay:
1. $1000 per month for 120 months
2. In addition to part 1, you pay $10,000 at the end

BORROWING $80,000
120 MONTHLY PAYMENTS OF $1000 PER MONTH
WHAT IS MAX RATE YOU CAN HANDLE?
0.72410% =RATE(120,-1000,80000,0,0)
IF YOU CAN PAY $10,000 AT END
WHAT IS MAX RATE YOU CAN HANDLE?
0.818%

$80,000.08

CHECK!
=PV(0.007241,120,-1000,0,0)

If you borrow $100,000 at 8 percent and make payments of $10,000 per year, how many years will it take to pay back the
Borrow $100000 8%
ANNUAL PAYMENTS OF $10,000 PER YEAR
END OF YEAR PAYMENT
HOW MANY YEARS?
20.91237188
20 YEARS WILL NOT PAY IT OFF; 21 WILL
CHECK
20 YEARS
$98,181.47
21 YEARS
$100,168.03
IF WE PAY $40,000 AT END OF PROBLEM
15.9012328
15 YEARS WILL NOT PAY IT OFF; 16 YEARS WILL

ears will it take to pay back the loan?

A
B
C
1 Calculate the Future Values for the following investments:
2
3 FV
Invest $2000 end of year for 40
4 years
$518,113.04
Invest $2000 beginning of year
5 for 40 years
$559,562.08
We start with $30000 and
invest $2000 per year at end of
6 year for 40 years
$1,169,848.68