Loan Amortization Problem

Loan Amortization Problem

Loan Amortization Problem

Subject: Business / Finance
Question

Now assume that your annual salary = 19 x $11,200 and that the bank you want to
borrow from, has determined that it will lend you,
loan amount= your annual salary x 3.0 =
interest rate = 19 x 0.55%
Assume that you will borrow for 30 years and you will make monthly payments at the
end of each month.
A) Calculate your monthly payment (Type your calculator inputs, i.e. N=, PV= and so on) B) Calculate the total interest amount you will pay over the life of the loan C) Fill in (type) the missing values in the amortization table below based on your payment found in A. Accuracy should be
six decimals, so use Excel to construct it.
D)
E) Month F) Beginning
Balance G) Payment H) Interest
payment I) Principal
Payment J) Ending
Balance K)
0 25 L) M) N) O) P) Q)
1 25 R) S) T) U) V) W)
2 25 X) Y) Z) AA) AB) AC)
3 25 AD) AE) AF) AG) AH) AI)
4 25 AJ) AK) AL) AM) AN) AO)
AP) Interest payment = monthly interest rate x beginning balance AQ) Principal payment = payment- interest payment AR) Ending balance = beginning balance – principal payment 2 AS) Beginning balance for period 1 is the amount borrowed, for all other periods it is the ending balance of the
previous period. 3 AT)
2nd Question – Stock Classifications
AU)
AV)
Identify all the following stocks as overpriced, underpriced or fairly valued. For
all calculations assume a market risk premium of 5 % and a risk free rate of 3%. Show all
your calculations.
AW)
AX)
AY)
BA)
BB)
Stock classification
Sto
E(
?i
BC)
(over, under or fairly valued)
c
R
k
i
)
AZ)
(%)
BD)
BE)
BF)
BG)
A
7.1
3
5
BH)
BI) 1
BJ) 1.7
BK)
B
2
.
0
8
BL)
BM)
BN)
BO)
C
5.3
1
BP)
BQ)
BR)
BS)
D
9
1.2
BT)
BU)
BV)
BW)
BX)
BY) 4