246 Chapter 5 Spreadsheets
- Mark and Jennie have a mortgage balance of $119,002.78. Their interest rate is 8.53%, and they currently are scheduled
to pay $1,195.06 per month on their loan. Jennie just got a major promotion, and they plan to use some of her raise to
help pay off their mortgage more quickly. Suppose that they increase their monthly payment to $1,500 per month. How
long will it take them to pay off their mortgage at that rate? - If I invest $3,000 this year in a retirement account, and then increase my annual investments by 5% each year, how
much will I have in this account in 25 years, assuming it earns a 10.2% rate of return? - Suppose you borrow $20,000 and plan to pay it off with monthly payments of $250 for the next 10 years. What interest
rate would your loan need to carry for this to work? - Suppose that an investment manager proposes that you invest $2,000 per year with his fi rm this year, and increase your
investment amount by $150 each year (so you invest $2,150 next year, $2,300 the next, and so on), and says that in
40 years you will be a millionaire. What rate of return on your investment is he assuming? - According to the Rule of 72, it would take a little more than 20 years for a sum of money earning 3.5% compounded
monthly to double. Use a spreadsheet to determine, correct to the nearest month, how long it would actually
take. - Ashok has a business loan on which he currently owes a $28,095 balance. The interest rate is 7.99% compounded
quarterly. If he makes quarterly payments of $1,250, how long will it take for him to pay off the loan entirely? How
much would his last payment need to be? How much total interest would he end up paying between now and when the
loan is fi nally paid off? - Set up an amortization table for a loan of $50,000 at 8.85% with monthly payments for 20 years. (Calculate the correct
monthly payment yourself.) Use this table to answer the following questions:
a. How much of the fi rst payment goes toward interest? Toward principal?b. At what point does the amount of each payment going to principal become larger than the amount going to
interest?c. Suppose that for the fi rst year I pay $1,800 a month, and then go back to the payment you calculated for this loan.
How long will it take to pay the loan off if I do this?d. What is the minimum amount that I would need to pay in the fi rst month to avoid negative amortization?- Paul owes $6,320.45 on his credit card. The interest rate is 18.99%. He has vowed to make no more charges to this
card until the balance is paid off. If he pays $100 a month, how long will it take to pay it off? - Paco’s Taco Hut has seven employees. Andy, Bill, Craig, Desiree, and Frances earn $7.35 per hour; Emma and Gerardo
earn $9.25 per hour.
a. Set up a spreadsheet to determine each employee’s gross pay, as well as the restaurant’s overall gross payroll for the
week, based on the hours each employee works.