Question

Lab 1: Check out my wheels! You want to purchase a car and need a loan of $15,000. Check the current interest rates online for 2 year car loans and 5 year car loans. Paste a link to the website that lists the interest rate. Create amortization tables for both loans. (For the 5 year loan, you will need to extend the table from the example.) What are the total payments for each loan? (You can sum the payments or multiply the amount of the payment by 12 (since there are 12 months in a year) and multiply again by the number of years. What is the balance on each loan after you have made 12 payments? You also have $2,000 on a credit card that has an interest rate of 21% (around the national average). The interest is compounded monthly. What is the balance if you make no payments for a year (Assume this is allowed). Copy your tables to your answer sheet and/or submit the excel files. Lab 2: Home Sweet Home. You want to buy a home and need a loan of $100,000. Home loans normally come with points. One point means you need to pay 1% of the amount of the loan at the start of the loan. Find the rate for a 15 year loan (again paste the source of your data) and create the amortization table. Find the rates for two different 30-year loans with different points. Create the amortization table for both. How long before payments (points plus monthly payments) for the higher point mortgage exceed the lower point mortgage?

Answer 1

Note: No interest rate found for 2-year car loans.

Current interest rate online for 5 year car loans: https://www.bankrate.com/loans/auto-loans/current-auto-loan-interest-rates/

Interest rate = 4.42% / 12 months = 0.37% monthly

1. What are the total payments for each loan?

5 year car loan:

Total monthly payments = 279.10 * 60 monthly payments = 16,746.00

Total interest pay = sum of all interest = 1,746.00

2. What is the balance on each loan after you have made 12 payments?

It´s 12,258.71

3. You also have 2,000 a credit card that has an interest rate of 21% (around the national average) The interest is compounded monthly. What is the balance if you make no payments for a year?

Montly payment = 186,23

Sum of monthly payments capitalizated to one year = 2426.88. This would be the balance of not making payments for a year

n	Balance Credit card	monthly payment	interest to pay	amortization
0	2000
1	1848.77	186.23	35.00	151.23
2	1694.90	186.23	32,35	153.87
3	1538.33	186.23	29.66	156.57
4	1379.02	186.23	26.92	159.31
5	1216.93	186.23	24.13	162.09
6	1052.00	186.23	21.30	164.93
7	884.18	186.23	18.41	167.82
8	713.43	186.23	15.41	170.75
9	539.68	186.23	12.48	173.74
10	362.90	186.23	9.44	176.78
11	183.02	186.23	6.35	179.88
12	0.00	186.23	3.20	183.02