Question

Due: November 4.2019 1. EXCEL Spreadsheet: a. You must use the FINANCIAL FUNCTIONS in EXCEL to calculate your answers b. All calculations must be done in Excel Do not calculate anything on your calculator and just enter the number into Excel (if you do this, you will not receive credit for this assignment). Do the calculation within the cell c. You must reference cells from your base case (Only input variables that change for each requirement.) d. Your spreadsheet should be formatted in a professional manner so it is easy to read. (I did very little formatting on my template, please add borders, text formatting. shading and be sure to format numbers consistently.) 2. Electronic copy of your EXCEL spreadsheet and Memo a. You must email me a copy of your EXCEL spreadsheet and Memo. b. Use the last name of one or more of your group members to name the excel file. For example: YOURLASTNAMEHW1xls Mortgage Analysis Part You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99 % on a 30-year mortgage 1. Use function "PMT" to calculate your mortgage payment 2. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest) 3. Calculate how much interest you will pay in total? 4. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment. (Use interest rate of 3.99 % ). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #3 Part II You want to determine whether or not you should save some of your money and put only 10 % down on your house. Because you are only putting 10 % down , lenders require that you purchase private mortgage insurance (PMI). Assume that PMI is 1% of the mortgage amount. (How does PMI work? For example, on a S100,000 loan, 1 % PMI means you are paying and additional S1,000 a year or $83.33 a month) 5. Calculate your total monthly payment (mortgage payment plus PMI) 6. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest) 7. Calculate how much interest and PMI you will pay in total? 8. What are the advantage and disadvantages between 20 % down payment vs. 10 % down payment and PMI? Which one do you pick? Please explain. (For this question, include a Memo that summarizes your analysis and outcomes in Excel)

Answer 1

As per rules I am answering the first 4 subparts of the question

	Loan amount	384000
	Rate	3.99%
	Term in years	30
1	Mortgage payment	$1,831.06
2	Total cost	$755,182.18
3	Total interest	$275,182.18
4	Time to repay the loan in months	275.39
	Total interest	383182.18

Workings

AutoSave o 9.3HD Book1 - Excel Sign in - 0 X File Home Insert Draw Page Layout Formulas Data Review View Help Tell me what you want to do Comments Share AY = = Calibri - 11 -A A BIU - BC-A - E O Insert - Delete - Format = 0 General SE- $ -% Alignment Number Paste La- . Conditional Format as Formatting Table Styles Cell Styles Sort & Find & Filter - Select Editing Font Cells Clipboard D1 co Cost of house =480000 1 Mortgage payment --PMTC5,C7,C3) Down payment 0.2 Loan amount =C1*(1-C2) 2 Total cost =C1*C2+G1*07 Rate 0.0399 Monthly rate =C4/12 3 Total interest =G1*07-C3 Term in years 30 Term in months =C6*12 4 Time to repay the loan in months =NPER(C5,G1+C8,-C3) Extra payment 300 Total interest = (G1+C8)*C7-C3 Sheet1 Sheet6 Sheet4 Sheet2 Sheets Sheet3 Sheet7 Sheet8 Sheet Shec... Ready + 100% E D -- - IENG 5:33 PM 3 0