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In: Finance

Exercise 1 Construct an amortization table in Excel to answer the following questions. You must use...

Exercise 1

Construct an amortization table in Excel to answer the following questions. You must use the corresponding Excel financial formulas whenever possible. Upon graduation, Federico Hernández, borrows $20,000 to finance a late model used car. The loan is made by a family member who was able to obtain an 8 % annual percent rate (APR). The loan is going to be payback in equal monthly payments over 5 years.

a) How much are the monthly payments?

b) How many total dollars of interest does Federico pay over the life of the loan?

c) How much of the third payment goes to pay interest? How much goes to pay principal?

d) How much of the 48th payment goes to pay interest? How much goes to pay principal?

e) Suppose that Federico decides to pay off at the end of year three. How much does he has to pay in order to pay off the loan in full.

Exercise 2

Construct a spreadsheet capable of generating the compound interest tables for any interest rate (i.e., if your change the interest rate the table you will automatically generate the values of the interest factors for that particular interest rate).

Please explain how to use and program each excel formula if possible

Thanks in advance

Expert Solution

As per rules I am answering the first 4 subparts of the question

a: Monthly payment = 405.53

b: Total interest paid =

$4,331.67

c: Payment No 3: Interest = 129.69

Principal = 275.84

d: Payment No 48: Interest = 33.56

Principal = 371.97

WORKINGS

Loan Amount	Interest Rate	Term in Years	Monthly Payment
$20,000.00	8.00%	5	$405.53

Month	StartingBalance	Interest	Principal	EndingBalance	TotalInterest
1	$20,000.00	$133.33	$272.19	$19,727.81	$133.33
2	$19,727.81	$131.52	$274.01	$19,453.80	$264.85
3	$19,453.80	$129.69	$275.84	$19,177.96	$394.54
4	$19,177.96	$127.85	$277.67	$18,900.29	$522.40
5	$18,900.29	$126.00	$279.53	$18,620.76	$648.40
6	$18,620.76	$124.14	$281.39	$18,339.37	$772.54
7	$18,339.37	$122.26	$283.27	$18,056.10	$894.80
8	$18,056.10	$120.37	$285.15	$17,770.95	$1,015.17
9	$17,770.95	$118.47	$287.05	$17,483.90	$1,133.65
10	$17,483.90	$116.56	$288.97	$17,194.93	$1,250.21
11	$17,194.93	$114.63	$290.90	$16,904.03	$1,364.84
12	$16,904.03	$112.69	$292.83	$16,611.20	$1,477.53
13	$16,611.20	$110.74	$294.79	$16,316.41	$1,588.27
14	$16,316.41	$108.78	$296.75	$16,019.66	$1,697.05
15	$16,019.66	$106.80	$298.73	$15,720.93	$1,803.85
16	$15,720.93	$104.81	$300.72	$15,420.21	$1,908.65
17	$15,420.21	$102.80	$302.73	$15,117.48	$2,011.46
18	$15,117.48	$100.78	$304.74	$14,812.74	$2,112.24
19	$14,812.74	$98.75	$306.78	$14,505.96	$2,210.99
20	$14,505.96	$96.71	$308.82	$14,197.14	$2,307.70
21	$14,197.14	$94.65	$310.88	$13,886.26	$2,402.34
22	$13,886.26	$92.58	$312.95	$13,573.31	$2,494.92
23	$13,573.31	$90.49	$315.04	$13,258.27	$2,585.41
24	$13,258.27	$88.39	$317.14	$12,941.13	$2,673.80
25	$12,941.13	$86.27	$319.25	$12,621.87	$2,760.07
26	$12,621.87	$84.15	$321.38	$12,300.49	$2,844.22
27	$12,300.49	$82.00	$323.52	$11,976.97	$2,926.22
28	$11,976.97	$79.85	$325.68	$11,651.29	$3,006.07
29	$11,651.29	$77.68	$327.85	$11,323.43	$3,083.74
30	$11,323.43	$75.49	$330.04	$10,993.39	$3,159.23
31	$10,993.39	$73.29	$332.24	$10,661.16	$3,232.52
32	$10,661.16	$71.07	$334.45	$10,326.70	$3,303.59
33	$10,326.70	$68.84	$336.68	$9,990.02	$3,372.44
34	$9,990.02	$66.60	$338.93	$9,651.09	$3,439.04
35	$9,651.09	$64.34	$341.19	$9,309.90	$3,503.38
36	$9,309.90	$62.07	$343.46	$8,966.44	$3,565.45
37	$8,966.44	$59.78	$345.75	$8,620.69	$3,625.22
38	$8,620.69	$57.47	$348.06	$8,272.63	$3,682.69
39	$8,272.63	$55.15	$350.38	$7,922.26	$3,737.84
40	$7,922.26	$52.82	$352.71	$7,569.54	$3,790.66
41	$7,569.54	$50.46	$355.06	$7,214.48	$3,841.12
42	$7,214.48	$48.10	$357.43	$6,857.05	$3,889.22
43	$6,857.05	$45.71	$359.81	$6,497.23	$3,934.93
44	$6,497.23	$43.31	$362.21	$6,135.02	$3,978.25
45	$6,135.02	$40.90	$364.63	$5,770.39	$4,019.15
46	$5,770.39	$38.47	$367.06	$5,403.33	$4,057.62
47	$5,403.33	$36.02	$369.51	$5,033.83	$4,093.64
48	$5,033.83	$33.56	$371.97	$4,661.86	$4,127.20
49	$4,661.86	$31.08	$374.45	$4,287.41	$4,158.28
50	$4,287.41	$28.58	$376.95	$3,910.47	$4,186.86
51	$3,910.47	$26.07	$379.46	$3,531.01	$4,212.93
52	$3,531.01	$23.54	$381.99	$3,149.02	$4,236.47
53	$3,149.02	$20.99	$384.53	$2,764.49	$4,257.46
54	$2,764.49	$18.43	$387.10	$2,377.39	$4,275.89
55	$2,377.39	$15.85	$389.68	$1,987.71	$4,291.74
56	$1,987.71	$13.25	$392.28	$1,595.43	$4,304.99
57	$1,595.43	$10.64	$394.89	$1,200.54	$4,315.63
58	$1,200.54	$8.00	$397.52	$803.02	$4,323.63
59	$803.02	$5.35	$400.17	$402.84	$4,328.99
60	$402.84	$2.69	$402.84	$0.00	$4,331.67

Formulae: Same repeated till payment No 60

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