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Group Activity 12 |
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Group Activity 12 |
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All group activities must include a statement signed by all members of your group that each group member fully participated in the activity. Save it to the desktop and save frequently during the hour.
To use the PMT Function...
Choose the Function Wizard button then Financial in the left
column and PMT in the right column. A screen will appear and you
will be prompted to enter values.
Rate is the loan interest rate. (Monthly amount)
Nper is the number of payments. (Total number of payments to be made)
Pv is the amount of the loan. (No change - just the amount of the loan)
Fv is the future value of the loan and is not filled in.(Leave blank)
Type is indicating whether the payment is made at the beginning or the end of the month. Use 0 for this problem.(Just enter 0 or leave blank)
Amortization Table
Month |
Beg Balance |
Payment |
Interest |
Principal |
End Balance |
0 |
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1 |
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2 |
SECTION I. LOANS
| 1. You have graduated from DePaul and decide to buy a condominium in Chicago for $239,000. The one bedroom, one bathroom condo is located on St. James Place in Lincoln Park. Assuming you need a loan for $227,050 what will your payments be assuming a 30 years mortgage at 6%? |
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Prime location in Lincoln Park. Fantastic mix of vintage and modern with a newer kitchen w/ granite, stainless steel & cabinets & counterspace galore! Updated bath (w/ whirlpool), walk-in closet in master, freshly & professionally painted. Surround system thruout. Built-in bookcases in large living room. Walk to lake, train, shopping & nightlife. |
2. What is the total amount you end up paying including principal and interest?
3. For comparison purposes, you also look at a 15 year mortgage at 5.5% for 15 years. What is your monthly payment?
4. What is the total amount you end up paying including principal and interest if you decide on the 15 year mortgage?
5. Which loan is better, 30 years at 6% or 15 years at 5.5%? Explain.
SECTION II. CREDIT CARDS
Read the following article that appeared on MSN.com - 4 Journeys Back From Hell
2. Vige Barrie had $60,000 in credit card debt. Based on the article, use a balance of $60,000, a monthly payment of $1,500 (flat payment) and assume an average interest rate of 20%.
a. What is Vige's balance after 5 years? How much in interest in total did she pay after the 5 years? Paste the first 5 lines of you amortization table in your Word document.
b. Now assume that Vige pays $1,825.82 per month (flat payment), after how many months will her balance be about 12-13 cents? How much interest did she pay after 48 months? (Don't forget to delete the rows where the end balance is negative before you sum the interest column.) Paste the first 5 lines of you amortization table in your Word document.
c. Does it make sense for Vige to try and pay $1,825,82 instead of $1,500 per month? Explain.
3. Let's assume that Paul Canady decided to stop using his credit after he accumulated a balance of $2,000 on his credit card (not $15,000) and it carried an interest rate of 15%. His credit card company has also given a choice of minimum payments.
a. Minimum payment option 1 - If he pays a minimum payment of 2% per month (not less than $25), what is his balance after 5 years? What is the amount of interest he paid to date? About how long will it take him to pay off his credit card if he continues to pay the minimum payment? Paste the first 5 lines of you amortization table in your Word document.