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I need help with D please, I think i am putting in the interest formula wrong...

 

i think its =20000(or cell #)*((0.0435/2+1)^(2*4)-1)

 

ross borrowed $20000 in a secured line of credit to finish his basement . the loan had an annual rate of 4.35 % compounded semi annually and he wanted to pay it off in four years . what would his payments be if he paid :

 a. monthly

N=

I%=

PV=

PMT=

FV=

P/Y=

C/Y=

 

b. bi -weekly

N=

I%=

PV=

PMT=

FV=

P/Y=

C/Y=

 

c.weekly

N=

I%=

PV=

PMT=

FV=

P/Y=

C/Y=

 

d. design a spreadsheet to calculate the interest he would have paid with each repayment option

     monthly repayments:

    bi-weekly repayments :

   weekly repayments :

 

e. what formula would you use in the spreadsheet to determine the interest paid par weekly payment ?

 Jan 23, 2018
edited by Guest  Jan 23, 2018
 #1
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D:

The first  thing you have to do is to convert the interest rate from compounded semi -annually to compounded monthly, bi-weekly and weekly. If you did it correctly, you should get the following:

 

Compounded monthly =4.31109416711%

Compounded bi-weekly =4.3069320008%

Compounded weekly =4.30514985512%

 

I pesonally do not use "Spreadsheets", so I cannot tell you exactly how to set it up on a Spreadsheet. But here is an amortization schedule which should be similar to a Spreadsheet. All you have to do is to copy the format from this schedule to your Spreadsheet. I have done only the MONTHLY amortization schedule, because this calculator is designed to do ONLY monthly payments.

 

http://www.calculator.net/amortization-calculator.html?cloanamount=20000&cloanterm=4&cinterestrate=4.31109416711&printit=0&x=50&y=23

 

Look at the 1st payment of this amortization schedule and copy it for bi-weekly and weekly schedules. This is how the 1st payment is broken down:

Take the above interest compounded monthly:4.31109416711/1200 =0.00359257847259 x 20,000=$71.85. This is interest on the loan for the 1st.month as you can see from schedule.

Look at the top of the schedule and you will see "Monthly pay =$454.37". You would subtract the interest payment of $71.85 from this and you would get:$454.37 - $71.85 =$$382.52. This is principal payment, which you will deduct from the loan: $20,000 - $382.52 =$19,617.48, which is the balance of the loan after the 1st payment. And so on.....

 Jan 23, 2018
 #2
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Thank you for reading my question! i am pretty sure its asking about monthly, weekly and biweekly payments, while the compounds stay at 2..... is it not?

Guest Jan 23, 2018
 #3
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Yes, they are asking you to make a spreadsheet for all three options:

Monthly payments, which I have already given you.

Bi-Weekly payments, which you have to calculate and make a spreadsheet for all 4 x 26 =104 payments.

Weekly payments, which again yo have to calculate and make a spreadsheet for all 4 x 52 =208 payments.

 

Using the above rate of bi-weekly compound, the bi-weekly payments would be=$209.51. Then you will have to make a spreadsheet for 104 payments and add up all the interest he would have paid, which should come to a total of =$209.51 x 104 - $20,000 =$1,789.04.

 

Do the same thing for a weekly compound, and the weekly payments should be =$104.71. Then you will have to make a spreadsheet for 208 payments and add up all the interest he would have paid, which should come to a total of=$104.71 x 208 - $20,000 =$1,779.68 .

Guest Jan 23, 2018
edited by Guest  Jan 23, 2018

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