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Assignment #2 - CPSC 111

The document provides instructions for completing an assignment to calculate the maximum loan amount a company can afford based on being able to pay $2760 per month for 25 years at an annual interest rate of 6.45%. It includes steps to enter the loan details, calculate the periodic rate, number of payments, maximum loan amount, and generate an amortization table showing the beginning balance, monthly payment, interest paid, principal paid, and ending balance for each payment period up to when the balance is paid off. The completed assignment is to be saved with the student's name and submitted.

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59 views2 pages

Assignment #2 - CPSC 111

The document provides instructions for completing an assignment to calculate the maximum loan amount a company can afford based on being able to pay $2760 per month for 25 years at an annual interest rate of 6.45%. It includes steps to enter the loan details, calculate the periodic rate, number of payments, maximum loan amount, and generate an amortization table showing the beginning balance, monthly payment, interest paid, principal paid, and ending balance for each payment period up to when the balance is paid off. The completed assignment is to be saved with the student's name and submitted.

Uploaded by

kimani nyutu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment #2

Loan Amortization
A company is comfortable paying $2760 at the end of every month for the next 25 years
to repay a loan. Calculate the maximum loan they can afford (Present value) using the
6.45% annual rate that the bank provided. You need to use the loan information to
generate an amortization table for the life of the loan.

Hint: to calculate the periodic rate (monthly rate), you need to divide annual rate by 12.

a. Display the Assignment #2 worksheet and enter the data from above into the
appropriate boxes for the loan Input. (10 marks)

b. Insert a formula in cell E3 to calculate the Periodic Rate for the loan. (5 marks)

c. Insert a formula in cell E4 to calculate the # of Payments (number of payments) for the
loan. (5 marks)

d. Insert a formula in cell E2 to calculate the Loan Amount they can afford based on the
information given above (Use PV to calculate the loan amount and enter the pmt as a
negative value in the PV function). (5 marks)

e. Add the reference to the initial Beginning Balance in cell B8 and then using the
fill handle complete the references for the rest of the cells in column “B”. (It
must be equal to the ending balance of its immediate last period) (5 marks)

f. Add the reference to the Monthly Payment in cell C8. It should be an absolute
cell reference. (5 marks)

g. Insert a formula in cell D8 to calculate the Interest Paid. (Amount of interest =


monthly rate * Beginning balance) (5 marks)

h. Insert a formula in cell E8 to calculate the Principal Payment. (Monthly payment


– interest amount) (5 marks)

i. Insert a formula in cell F8 to calculate the Ending Balance. (10 marks)

j. Insert a formula in cell B9 to populate the new Beginning Balance. (10 marks)

k. Use the fill handle (auto fill) to copy the formulas to the remainder of the table.

Note that the table has only 60 pre-defined rows, but you need to keep going
until your ending balance becomes zero. Total number of rows in the
amortization table should be equal to the value in cell E4 (10 marks)
Assignment #2

Workbook Completion
l. Complete the workbook by adding your name into the footer. (10 marks)

m. Using freeze pain tool in excel, freeze the headers of the amortization table. (10
marks)
n. Set the print view to the amortization table only. (5 marks)

o. Save and close the file. Based on your instructor’s directions submit Assignment
#2_FirstLast. (-10 marks if not applied)

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