The Mathematics of Money

(Darren Dugan) #1

234 Chapter 5 Spreadsheets


B. Using Spreadsheets to Find Payoff Time



  1. Brad’s mortgage has an $89,902.49 balance right now. The interest rate is 7.59%. How long will it take him to pay off
    this loan if he pays $1,000 per month? How much will his last payment be?

  2. Suppose you owe $8,502.25 on a credit card. Realizing that this is not a good thing, you vow to make no more charges
    to the card and work hard to pay the balance off. The interest rate is 18.75%. How long will it take to pay off this
    balance assuming you pay (a) $125 per month, (b) $250 per month, (c) $500 per month?

  3. How long will it take me to pay off a $10,595 debt at 16% if I pay $250 per month?

  4. Rick has taken out a $125,000 small business loan to be able to launch his new property maintenance business. The
    loan carries an interest rate of 7¼% compounded quarterly. If he makes quarterly payments of $7,500, how long will it
    take to pay off the loan, how much will his last payment need to be, and how much total interest will he pay?


C. Negative Amortization



  1. Britt owes $1,984.92 on a personal loan. The interest rate is 15.4%. How long will it take to pay off this loan if she pays
    $25 a month? If she pays $50 a month? What is the minimum she needs to pay each month in order to avoid negative
    amortization?

  2. What is the minimum monthly payment necessary to avoid negative amortization on a debt of $48,500 at 7.75%?


D. Grab Bag



  1. I borrowed $21,500 for 6 years at 8.48%. Assuming that I make all of my monthly payments as scheduled, how much
    will I owe at the end of 3 years?

  2. Erin and Scott have just taken out a mortgage loan for $168,308. The interest rate is 7.13% and the term is 30 years.
    Calculate their monthly payment for this loan. If they pay twice the monthly payment you calculated, how long will it
    take them to pay off their loan? If they pay half the monthly payment you calculated, how long will it take them to pay
    off this loan?

  3. How long will it take to pay off a $100,000 debt at 10.44% interest with a monthly payment of $1,200? What would
    the fi nal monthly payment need to be?

  4. Suppose I have a loan with a $25,804.56 balance on which I am paying $825 a month. The interest rate is 7.9%.
    How long will it take me to pay off this loan at this rate?

  5. What is the minimum you need to pay each month on a $81,575 debt at 10½% in order to avoid negative
    amortization?

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