Question

Example 1: Complete the first month's charges and find the balance for Month 2. The APR is 15.99% with a minimum payment of 5%. The carry-over balance is $500.

Student Answer:

Month	Carry-Over Balance	Finance Charge	New Balance	Minimum Payment
1	$500	$6.66	$506.66	$25.33
2	$474.67	XXXXXXXX	XXXXXXX	XXXXXXXXX

Example 2: What exact excel formula is needed to find the monthly payment for a house that costs $90,000? The APR is 4.5% for a 30-year loan.

Student Answer:

=PMT(4.5/12,30*12,-90000)

Example 3: Using Excel, what formula is needed to find the total loan amount for a new car? You can spend $180 each month on payments and the loan rate is 5.72% for 4 years.

Student Answer:

=PV(.0572/12,4/12,-180)

Answer 1

Solution

Example 1

Monthly Carry Over	Balance Finance Charge	New Balance	Minimum Payment
$                     500.00	$                                6.66	$       506.66	$                    25.33
$                     481.33	$                                6.41	$       487.74	$                    24.39
$                     463.36	$                                6.17	$       469.53	$                    23.48
$                     446.05

Example 2

If the student gives the above answer the result will be as follows;

=PMT(4.5/12,30*12,-90000) = $33,750

The Correct Answer is as follows;

=PMT(4.5%/12,30*12,90000) = -$456.02( We have to mention the interest in percentage and not in numbers. The loan amount can be in negative (-90000) or in positive(90000)).

So the Monthly payment will be $456.02

Example 3

The total loan amount for a new car will be =PV(5.72%/12,4*12,-180) = $7706.51

Hope it will helps you

Thank You