Question

In: Finance

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


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