EJ Corp bond carries a 9 percent coupon, paid semi-annually. The par value is $1,000, and the bond matures in 12 years. If the bond currently sells for $905.50 (PV), what is its yield to maturity? Enter PV as a negative number. Calculate equal 24 payments ($1,000*.09/2) and enter. Remember the last payment is the return of principal plus PMT. Use IRR(cash flows).
Time Payment Periods Cash Flow Today 0 Pv>= ? 1 ? 2 ? 3 ? 4 ? 5 ? 6 ? 7 ? 8 ? 9 ? 10 ? 11 ? 12 ? 13 ? 14 ? 15 ? 16 ? 17 ? 18 ? 19 ? 20 ? 21 ? 22 ? 23 ? Add FV to PMT= 24 ?
IRR=> ?
The YTM is 2*IRR===> ?
EJ Corp bond carries a 9 percent coupon, paid semi-annually. The par value is $1,000, and the bond matures in 12 years. If the bond currently sells for $905.50 (PV), what is its yield to maturity? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Enter PV as a negative number. Calculate equal 24 payments ($1,000*.09/2) and enter. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remember the last payment is the return of principal plus PMT. Use IRR(cash flows).
IRR=> ? The YTM is 2*IRR===> ? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Problem 6.35 | Loan Amortization | |||||||
Trevor Diaz is looking to purchase a Mercedes Benz SL600 Roadster which has an invoice price of $121,737 and a total cost of $129,482. Trevor plans to put down $20,000 and will pay the rest by taking on a 5.75 percent five-year loan from Bank of America. What is the monthly payment on this auto loan? Prepare an amortization table using Excel. | ||||||||
a. What is the monthly payment on this auto loan? | ||||||||
Hint: Use the present value of an annuity equation to solve for the monthly payment and then use the PMT financial function to solve: PMT(rate,nper,pv,fv,type). The present value of the annuity is the total amount borrowed. Make sure that all cells are properly formatted. | ||||||||
Cost of new car: | ||||||||
Down payment: | ||||||||
Loan amount: | ||||||||
Interest rate on loan: | ||||||||
Term of loan (years): | ||||||||
Frequency of payment: | ||||||||
Monthly payment on loan: | ||||||||
Monthly payment on loan: | ||||||||
b. Prepare an amortization table using Excel. | ||||||||
Hint: Insert the proper equation in each column and copy down the appropriate number of periods. Calculate total interest, principal, payments, and ending balance using the template below. | ||||||||
Loan amount: | ||||||||
Interest rate on loan: | ||||||||
Term of loan: | ||||||||
Frequency of payment: |
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Problem 6.35 | Loan Amortization | ||||||||
Trevor Diaz is looking to purchase a Mercedes Benz SL600 Roadster which has an invoice price of $121,737 and a total cost of $129,482. Trevor plans to put down $20,000 and will pay the rest by taking on a 5.75 percent five-year loan from Bank of America. What is the monthly payment on this auto loan? Prepare an amortization table using Excel. | |||||||||
a. What is the monthly payment on this auto loan? | |||||||||
Hint: Use the present value of an annuity equation to solve for the monthly payment and then use the PMT financial function to solve: PMT(rate,nper,pv,fv,type). The present value of the annuity is the total amount borrowed. Make sure that all cells are properly formatted. | |||||||||
Cost of new car: | |||||||||
Down payment: | |||||||||
Loan amount: | |||||||||
Interest rate on loan: | |||||||||
Term of loan (years): | |||||||||
Frequency of payment: | |||||||||
Monthly payment on loan: | |||||||||
Monthly payment on loan: | |||||||||
b. Prepare an amortization table using Excel. | |||||||||
Hint: Insert the proper equation in each column and copy down the appropriate number of periods. Calculate total interest, principal, payments, and ending balance using the template below. | |||||||||
Loan amount: | |||||||||
Interest rate on loan: | |||||||||
Term of loan: | |||||||||
Frequency of payment: |
Payment# | Payment | Interest | Principle | Balance |
$0.00 | ||||
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Totals: |