A | B | C | D | E | F | G | H | I | J | K |
2 | ||||||||||
3 | a) | |||||||||
4 | Calculation of monthly payment: | |||||||||
5 | Loan Amount | $ 27,000.00 | ||||||||
6 | Duration of loan | 60 | Months | |||||||
7 | Monthly Interest rate | 0.50% | ||||||||
8 | ||||||||||
9 | RATE (Montly interest rate): | 0.50% | ||||||||
10 | NPER (No of Months): | 60 | ||||||||
11 | PV (Loan Amount): | -$27,000 | ||||||||
12 | FV | 0 | ||||||||
13 | TYPE | 0 | ||||||||
14 | Monthly Payment : | $521.99 | =PMT(D9,D10,D11,D12,D13) | |||||||
15 | ||||||||||
16 | Hence Monthly payment is | $521.99 | ||||||||
17 | ||||||||||
18 | b) | |||||||||
19 | ||||||||||
20 | Calculation of Value of loan: | |||||||||
21 | ||||||||||
22 | Value of loan will be the present value of all the monthly payments. | |||||||||
23 | Monthly Payment | $521.99 | ||||||||
24 | Monthly Interest Rate | 0.50% | ||||||||
25 | Number of months remaining | 36 | ||||||||
26 | ||||||||||
27 | ||||||||||
28 | Value of loan | =Present value of annuity of monthly payments | ||||||||
29 | =521.99*(P/A,0.5%,36) | |||||||||
30 | $17,158.20 | =D23*PV(D24,D25,-1,0) | ||||||||
31 | ||||||||||
32 | Hence Value of loan is | $17,158.20 | ||||||||
33 | ||||||||||
34 | c) | |||||||||
35 | ||||||||||
36 | Value of car is $16,000 which is lesser than the value of loan as calculated above. | |||||||||
37 | Thus there is negative equity on the loan. | |||||||||
38 | Therefore she should keep try to keep the car in good condition so that the equity becomes positive in future. | |||||||||
39 | Hence the first option is correct. |
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