Explanation Approach: The first column A is the payment number, the second column B is Principal portion, the third column C is interest portion, the fourth column D is the monthly payment, the fifth column E is the outstanding balance. Make the column A wider. Format the cell E 2 by clicking the cell and press the $ button on the Excel ribbon on top of the screen. Include the % symbol in cell G 2 . The monthly payment can be found by using the amortized loan formula. Use the PMT function in Excel. The syntax for the PMT function is PMT(interest rate, number of payments, PV, [FV],[Type]). Here, PV denotes the present value, FV denotes the future Value, Type denotes when the payments are due. Steps for the monthly payment Click on cell D 3 and then on f x button. Select “Financial” under “Function Category”. Select “PMT” under function name and then press OK. Now a PMT box will appear. Type “ $ G $ @ 2 / $ G 4 $ 2 ” after rate in PMT box. Type $ G $ @ 3 / $ G 4 $ 3 after Nper in PMT box. After PV, type $ E $ 2 . Do not type anything after “FV” or “Type”. Press OK and save the spreadsheet. Click on D 3 and change=PMT( $ G $ 2 / $ G $ 4 , $ G $ 3 ∗ $ G $ 4 , $ E $ 2 ) to =ROUND(-PMT( $ G $ 2 / $ G $ 4 , $ G $ 3 ∗ $ G $ 4 , $ E $ 2 ), 2 ) To determine (b) To find: The interest paid in the last year. To determine (c) To find: The formula typed in parts a and b.

8th Edition

ISBN: 9781305104174

Author: David B. Johnson, Thomas A. Mowry

Publisher: Cengage Learning

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Question

Chapter 5.4, Problem 61E

To determine

(a)

To find:

The total interest paid in the loan’s first year.

To determine

(b)

To find:

The interest paid in the last year.

To determine

(c)

To find:

The formula typed in parts a and b.

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Chapter 5.4, Problem 60E

Chapter 5.4, Problem 62E

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Chapter 5 Solutions

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(a) To find: The total interest paid in the loan’s first year.

Solution Summary: The author explains how the monthly payment can be found by using the amortized loan formula.

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(a) To find: The total interest paid in the loan’s first year.

(b) To find: The interest paid in the last year.

(c) To find: The formula typed in parts a and b.

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Chapter 5 Solutions

(a)

To find:

The total interest paid in the loan’s first year.

(b)

To find:

The interest paid in the last year.

(c)

To find:

The formula typed in parts a and b.