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Build a amortization table for the loan below add extra payment to pay off early by...

Build a amortization table for the loan below add extra payment to pay off early by no more the 6 months (the loan payment must last 4.5 years even with early payoff) . Show the money saved.

$35,000 loan, 5 years, 5.9% interest, monthly payments with no balloon.

Create an annuity solution to find the payment in Excel (that's the N I/Y PV PMT FV) and then do the amortization table for it.

Solutions

Expert Solution

Using excel function

= PMT (rate, nper, PV)

Rate = 5.9%/12 for monthly rate

nper = 5 years*12 = 60 months

PV = -35,000 (- sign for getting positive value of annuity)

=PMT( 5.9%/12, 60, -35000)

= $675.02

The amortization table will be as below:


Clearly, there is saving of money in extra payment to pay off early.

Saving = $5432.52 - $5,501.31 = $68.79

jeff jeffy answered 2 years ago
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