#### math-genius-not

##### New member

- Joined
- Nov 30, 2018

- Messages
- 9

**Q1**

a) Calculate the original loan amount using the following details:

a) Calculate the original loan amount using the following details:

*Using the PV function in excel, I get the correct answer ($20,419.00) - how is this expressed long hand?*

P | = | Loan Amount (Principal) | ? |

r | = | Annual Interest Rate | 6.3% |

n | = | No. of periods per year | 12 |

t | = | Loan Term (years) | 5 |

PMT | = | Monthy Loan Payment | $395.53 |

**b) A bank can access funds at 5.3%, but can loan funds at 6.3%. Calculate the spread in dollars using the figures in a)**

*the answer is $484.00*

Working backwards in Excel, PV = $20,899.43 using -PV(0.053/12,60,395.53,0,1) then $20,899.43 - $20,419 = $480.43

It's as close as I can get with Excel

Loan Amount = $20,419

Working backwards in Excel, PV = $20,899.43 using -PV(0.053/12,60,395.53,0,1) then $20,899.43 - $20,419 = $480.43

It's as close as I can get with Excel

PMT = $395.53

Bank Rate = 5.3%

Loan Rate = 6.3%

Term = 60 months

Payments are in advance

Spread ($) = $484.00

*How would I express this in an equation?*

**Q2 - Do the same as in Q1 a) and b), however this time there is a balloon added in.**

P | = | Loan Amount (Principal) | ? |

r | = | Annual Interest Rate | 6.3% |

n | = | No. of periods per year | 12 |

t | = | Loan Term (years) | 5 |

PMT | = | Monthy Loan Payment | $367.24 |

FV | = | Balloon Payment | $2,000 |

Hope you guys can help. Thanks in advance