Question

32 PAYMENTS 33 9) What is the amount of each loan payment: 34 ($32,000) Amount Borrowed 5 Years 4.25% Annual Interest Rate Annual Payments Payment Total Amount Repaid Total Interest Paid 42 43 10) What is the amount of each loan payment: 44 ($32,000) Amount Borrowed 5 Years 3.00% Annual Interest Rate Monthly Payments Payment Total Amount Repaid Total Interest Paid 53 11) You want to borrow $25,000 to buy a car. 54 Bank offers 3.85% interest (montly payments) for 5 years. 55 Your montly payment will be 56 Total you will pay for car will be 57 Total amount of interest will be 58

Answer 1

First picture has all the answers and second picture has formulae used in excel to get those answers.

To calculate periodis payments PMT formula. periodic payment include both annual payments and monthly payments.

Description of PMT:

=PMT(rate,nper,pv,[fv],[type])

where,

rate means the rate of interest for the payment period. So, for annual payments we take the rate given and for monthly payments we divide the rate by 12.

nper, number of period for the payment, so if its annual payments nper will 5 and if it is monthly then nper will be 5*12

pv, implies for present value or the loan amount receiced. In case of loans pv will be negative as negative indicated inflows and positive indicates outflows in this case.

[fv], implies for the future value.

[type], it implies the type of the payments. There are two options, one is 0 which means payments made at the end of the period and other is 1 which means payments made in the beginning of the period.

Totat Payment means annuity payments paid multiplyied by the number of periods. In breif it is the absolute value of the total outdlows.

Total Interest paid = Total Payments - loan principal ( in pictueres it is shown + because the loan input is already negative)

U Copy Home Insert Draw Page Layout Formulas Data Review View Xcut Calibri (Body) - 12 - A- A = = = vOr Paste Format BI U S A E 333 D10 x ✓ fx A B C D 5 Wrap Merge 4 Payments 5 9) What is the amount of each payment: $ (32,000.00) Amount Borrowed 5 Years 4.25% Annual Interest Rate Annual Payments 10 $ 7,238.63 Payment 11 $ 36,193.13 Total Amount Repaid 12 $ 4,193.13 Total Interest 13 14 10) What is the amount of each payment: $ (32,000.00) Amount Borrowed 16 5 Years 3.00% Annual Interest Rate 18 Monthly Payments *575.00 Payment 20 34,499.89 Total Amount Repaid 21 2,499.89 Total Interest Paid 17 19 24 11) You want to borrow $25,000 to buy a car. 25 Bank offers 3.85% interest (monthly payments) for 5 years. 26 Your monthly payment will be $ 458.72 27 Total you will pay for car will be $ 27,523.36 28 Total amount of interest will be $ 2,523.36 29 30 Sheet1 + Ready

Paste .0 Merge & Centre .00 00 .0 Conditional Format Formatting as Table Format x BIU fe D19 4 Payments 5 9) What is the amount of each payment: 6 -32000 75 8 0.0425 Amount Borrowed Years Annual Interest Rate Annual Payments Payment Total Amount Repaid Total Interest 10 =PMT(A8,A7,A6,0,0) 11 =A10*A7 12 =A11+A6 13 14 10) What is the amount of each payment: 15 -32000 16 5 17 0.03 18 19 =PMT(A17/12 A16*12,215,0,0) =A19*16*12 21 =A20+A15 Amount Borrowed Years Annual Interest Rate Monthly Payments Payment Total Amount Repaid Total Interest Paid 23 24 11) You want to borrow $25,000 to buy a car. 25 Bank offers 3.85% interest (monthly payments) for 5 years. 26 Your monthly payment will be 27 Total you will pay for car will be 28 Total amount of interest will be =PMT(3.85%/12,5*12,-25000,0,0) =D26*5*12 =D27-25000 29 Sheet1 + Ready