Question

Chapter 11 - Exercise 03
Kyle Godwin is interested in buying a 24-foot pontoon boat for $11,850. His credit union’s terms are 10% down, 14% interest, and 24 months to pay off the loan. Calculate the amount to be financed, the interest, the amount to be repaid, and the monthly payment.
Terms of Loan		Payment Calculations
Purchase Price	$11,850.00	Amount to be Financed
Down Payment Percent	10%	Interest
Interest Rate	14%	Amount to be Repaid
Term (months)	24	Monthly Payment
Directions:
a. Enter a formula in Cell D5 to calculate the Amount to be Financed.
b. Enter a formula in Cell D6 to calculate the Interest.
c. Enter a formula in Cell D7 to calculate the Amount to be Repaid.
d. Enter a formula in Cell D8 to calculate the Monthly Payment.
e. Format Column D for Currency. Set Decimal places to 2. Set Currency symbol to $.
f. Save the file as ch11ex03a.xlsx.

Answer 1

Answer- A:

Amount need to be Financed = Purchase Price - Down Payment = $11,850 - 10% of $11850 = $10,665.00

Answer- D

To calculate Monthly Payment use the "PMT" function of excel as follow:

$512.06

Answer- B

To calculate interest to be paid use the CUMIPMT function of excel;

$1,624.38

Answer- C;

Amount to be repaid = Monthly Installment * No. of Payments = $512.06 * 24 = $12,289.44