Question

8. What are the adusn Due: November 4, 2019 1. EXCEL Spreadsheet: a. You must use the FINANCIAL FUNCTIONS in EXCEL to calculate your answers. b. All calculations must be done in Excel. Do not calculate anything on your calculator and just enter the number into Excel (if you do this, you will not receive credit for this assignment). Do the calculation within the cell. c You must reference cells from your base case. (Only input variables that change for each requirement.) d Your spreadsheet should be formatted in a professional manner so it is easy to read. (1 did very little formatting on my template, please add borders, text formatting, shading and be sure to format numbers consistently.) 2. Electronic copy of your EXCEL spreadsheet and Memo. a. You must email me a copy of your EXCEL spreadsheet and Memo. b. Use the last name of one or more of your group members to name the excel file. For example: YOURLASTNAMEHW1.xls Mortgage Analysis Part You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99 % on a 30-year mortgage. 1. Use function "PMT" to calculate your mortgage payment. 2. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.) 3. Calculate how much interest you will pay in total? 4. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99%). Calculate how much interest you will pay in total? Compare this to the value that you calculated for # 3. Part II You want to determine whether or not you should save some of your money and put only 10 % down on your house. Because you are only putting 10 % down, lenders require that you purchase private mortgage insurance (PMI). Assume that PMI is 1 % of the mortgage amount. (How does PMI work? For example, on a $100,000 loan, 1 % PMI means you are paying and additional $1,000 a year or $83.33 a month) 5. Calculate your total monthly payment (mortgage payment plus PMI). 6. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.) 7. Calculate how much interest and PMI you will pay in total?

Answer 1

Book1 - Microsoft Excel X File Review Home Insert Page Layout Formulas Data View E AutoSum Cut A A Wrap Text Calibri 11 Currency Copy Fill В IU Merge & Center Paste +.0 .00 00 0 Conditional Format Cell Insert Delete Format Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fxPMT(G7/12, G8,-G6) G10 A. В C F G Н J К М N р Q R. 1 2 4 5 480000*.80 6 amount 384000 3.99% 7 interest tenor (months) 30*12= 360 R1,831.06 10 mortgage payment 11 12 13 14 15 16 17 18 19 20 21 22 23 Activate Windows Go to Settings to activate Windows 24 Sheet2 Sheet3 Sheet1 Ready 100% 01:20 AM W A»E ENG Search the web and Windows A 31-10-19

a.

By using PMT function , the Monthly mortgage is $1831.06

The formula used is shown in the formula bar.

b.

to calculate the total amount repaid, we first need to calculate the total interest paid

and it can be calculated by using CUMIPMT Formula in excel

Book1 Microsoft Excel X File Review Home Insert Page Layout Formulas Data View E AutoSum Cut AA Wrap Text Accounting Calibri 11 Copy Fill Sort & Find & Filter Select B IU Merge & Center % Conditional Format Formatting as Table Styles Paste - +.0 .00 .00 .0 Cell Insert Delete Format Format Painter Clear Clipboard Font Alignment Number Styles Cells Editing fCUMIPMT(C4/12,C6, C3, 1, C6,0) C7 A B C. D E F G H J K L N O P R 2 Principal 384000 annual interest 3.99% 4 5 30 years to loan tenor in months 6 360 total interest paid during the period 7 -275,182.18 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Activate Windows Go to Settings to activate Windows 24 Sheet2 Sheet3 Sheet1 II Ready + 100% 01:28 AM W A»E ENG Search the web and Windows 31-10-19

So the total amount repaid = down payment + principal + interest

= 96000+384000+275182.18

= $755,182.18

c.

its already calculate

total interest paid = $275,182.18

d.

to calculate the total time for loan after adding $300 to the EMI cal be calculated by the Nper function in excel

Book1 Microsoft Excel - X File Review Home Insert Page Layout Formulas Data View E AutoSum Cut AS Wrap Text Accounting Calibri 11 Copy Fill Sort & Find & Filter Select в IU- Merge & Center % Paste +.0 .00 .00 .0 Conditional Format Cell Insert Delete Format B Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fxNPER(C4/12, C9, - C3) C11 А В C D E F G Н К L N O P R 1 2 Principal 384000 annual interest 3.99% 4 5000 4.50% 5 30 years to loan tenor in months 6 360 93.22 EMI 7 1,831.06 60.00 Additional R300.00 total EMI 2,131.06 tenor for loan in months 11 275.39 12. 13 14 15 16 17 18 19 20 21 22 23 24 Activate Windows Go to Settings to activate Windows 25 Sheet2 Sheet3 Sheet1 II Ready + 100% 01:38 AM W A»E ENG Search the web and Windows 31-10-19

So the new tenor will be 275 months or 22 years 11 months .

So after the new tenor, the new total interest amount would be,

Book1 Microsoft Excel X File Review Home Insert Page Layout Formulas Data View E AutoSum Cut Wrap Text AA Accounting Calibri 11 ECopy Fill Merge & Center Sort & Find & Filter Select В IU- % Paste +.0 .00 .00 .0 Conditional Format Cell Insert Delete Format Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing f CUMIPMT(C4/12, C11, C3, 1, C11,0) C12 А В C D E F G Н К L N O P R 1 2 Principal 384000 annual interest 3.99% 4 5000 4.50% 5 30 years to loan tenor in months 6 360 93.22 7 EMI 1,831.06 60.00 Additional 300.00 total EMI 2,131.06 9 tenor for loan in months 11 275.39 interest to be paid in total -202,861.70 12. 13 14 15 16 17 18 19 20 21 22 23 24 Activate Windows Go to Settings to activate Windows 25 Sheet2 Sheet3 Sheet1 II Ready + 100% 01:42 AM W 4»E ENG Search the web and Windows 31-10-19

Total interest paid= $202,861.70

So the interest has decreased by (275182.18-202861.70) $ 72,320.48.