Solve using excel 2. You give a loan to your friend to buy equipment for his...

Solve using excel

2. You give a loan to your friend to buy equipment for his business. The friend puts $4000 of their own money as a down payment, you lend them $12,000. The equipment is $16,000 total. You will charge your friend 4.0% Interest every year and will collect monthly payments for 60 months. Inflation is 1.7% per year, constant for 5 years.

a. What is the monthly payment you will collect?

b. What is the total amount of payments you will collect?

c. What is the vehicle worth at the end of the loan term if it depreciates in value at $150 each month?

Solutions

Expert Solution

a	Loan amount	PV	12000
	Rate of interest	Rate	4%
	Number of months	Nper	60

	Monthly payment	PMT	$221.00

b	Total paymnets collected	PMT*Nper	$13,259.90

c	Worth of vehicle after 5 years	16000-150*Nper	7000

WORKINGS

jeff jeffy answered 1 year ago

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