Practice: LOAN Excel should already be started.

® OPEN LOAN Open LOAN, w h i c h is an Excel data file for this text. The displayed worksheet is a partially completed amortization table.

(D ENTER THE LOAN'S INFORMATION - - ^ ^ I n order to purchase a house, a loan called a mortgage is usually obtained.

a. I n cell B3, enter the yearly interest rate: 7%

b. I n cell B4, enter the number of payments: 360 (30 years x 12 monthly payments)

c. I n cell B5, enter the principal: $200,000

(D CALCULATE THE MONTHLY PAYMENT — I n cell B7, enter the formula: =PMT(B3/12, B4, -B5)

The division by 12 is needed to convert the yearly interest rate i n cell B3 to a monthly value. $1,330.60 is displayed. i. . -, - . • _

® CALCULATE TOTAL PAID AND TOTAL INTEREST a. I n cell B9, enter the formula: =B4*B7

This formula computes the total paid for the loan, $479,017.80, including principal and interest.

b. I n cell BIO, enter the formula: =B9-B5. The total interest paid over the 30 years, $279,017.80 is displayed:

A , B 1 Loan Amortization Table i

1— 2 3 Interest rate = 7%

4 Number of payments = 360

5 Principal = $200,000

6 i 7 Monthly payment = $1,330.60

8 9 Total paid = $479,017.80

10 Total interest = $279,017.80,

1-

(D ENTER THE FIRST PAYMENT DATA a. I n cell A13, enter: 1

b. I n cell B13, enter: =B5

c. I n cell C13, enter the formula: =B13*($B$3/12)

This formula calculates one month's interest on the loan. $1,166.67, w h i c h is 1 % (7%/12) of the principal, is displayed. The cell reference B3 is an absolute cell refer­ence because the interest rate w i l l be the same for each payment.

d. I n cell D13, enter the formula: =IF(C13<0.01, 0, $B$7-C13)

This formula calculates the amount of the payment which is applied to the principal, $163.94. I f the value i n cell C13 is less than 0.01 (less than a penny), then 0 is displayed. A n IF function is used to avoid problems due to rounding.

e. I n cell E13, enter the formula: =B13-D13. The new principal owed is displayed.

Chapter 6 Functions and Data Organization

® ENTER FORMULAS FOR THE SECOND PAYMENT a. I n cell A M , enter the formula: =A13+1

b. I n cell B14, enter: =E13

c. Copy the formulas i n cells C13 through E13 to cells C14 through E14:

~ Z~A " B C D " E 1 Loan Amortization Table

"2 I 3 Interest rale = 7% 4 Number of payments = 360

5 Principal = $200,aX) 6 7 Monthly payment = $1,330.60

9 Total paid = $479,017.80

10 Total interest = $279,017.80

11 12 j Payment Principal Pay to Interest Pay to Principal Principal Owed

JSj 1 $200,000.00 $1,166.67 $163.94 $199,836.06

(z) COMPLETE THE TABLE Copy the formulas i n cells A14 through E14 into cells A15 t h r o u g h E372. The principal owed is $0.00 i n cell E372, w h i c h indicates the loan has been paid i n f u l l .

(D ADD A HEADER AND FOOTER AND PRINT A PORTION OF THE WORKSHEET a. A d d a header w i t h your name and a footer w i t h the current date. '

b. Select cells A l through E15.

c. Click Page Layout — Orientation — Landscape.

d. Click Page Layout - Print Area — Set Print Area. Note the dashed lines around the cells indicating the pr int area.

e. Click anywhere to remove the selection.

f. Save the modif ied LOAN.

g. Print preview the worksheet. Note that only the cells designated as the pr int area are displayed.

h. Print the worksheet.

i . Click Page Layout - Print Area - Clear Print Area. The pr in t area is now set to the entire worksheet.

d ) CREATE AN AUTO LOAN MODEL a. I n cell B3, enter: 8%

b. The car loan is a 5 year loan; therefore, the number of monthly payments w i l l be 5 X 12. I n cell B4, enter: 60

c. I n cell B5, enter: $22,000

d. Scroll down to row 60 which contains the last payment. The worksheet can easily model loans w i t h less than 360 payments.

e. Save the modified LOAN and pr int a copy of the first three pages.

Chapter 6 Functions and Data Organization