Excel Assignment Background Information You Are Considering

Excel Assignmentbackground Informationyou Are Considering The Purchase

Excel assignment Background information You are considering the purchase of a new car and taking out a loan. Here are the terms. · Loan Amount: $35,000 · Interest rate: 6.5% (Annual), compounded monthly · Term: 60 months Task #1: Determine the total cost of the loan (Payment per month * number of months). Payment per month can be found using the PMT function. =PMT(rate/12,term_in_months,loan_amount) Task #2: Now that you have the total cost of the car and the initial loan amount, determine the total amount of interest paid on the life of the loan. Task #3: Compute and show on the spreadsheet, the monthly balance and interest paid each month for all 60 months. · Interest is paid each month on the previous month’s balance. · The balance for each month is the previous month’s balance, plus interest, minus the payment.

Also answer these questions Assume that you can negotiate some of the terms. Determine how much you could save if you could negotiate a 10% better price, lower interest rate, or shorter term. You don’t have to re-calculate the monthly balance for each scenario. This can easily be done by changing the values in the PMT function. If you have the total cost computed automatically, you can make the change and the new value will be computed. Task #4: Recalculate total cost, total interest paid and monthly payment, with price lowered to 31%, off). Task #5: Recalculate total cost, total interest paid and monthly payment, with interest lowered to 6.1%. Task #6: Recalculate total cost, total interest paid and monthly payment, with length of loan reduced to 54 months. Task #7: Which of the 3 choices (Tasks 4, 5, 6) saves you the most total money (lowest total cost)? Mark clearly on the Excel sheet. Task #8: Which of the 4 choices (original problem and Tasks 4, 5, 6) gives you the lowest total interest on the life of the loan? Mark clearly on the Excel sheet. Task #9: Which of the 4 choices (original problem and Tasks 4, 5, 6) allows you to pay the lowest monthly payments? Mark clearly on the Excel sheet. How to submit Upload the excel spreadsheet (NOT AS A PDF) to the assignment submission on eCampus showing all of the requested information (tasks 1-9). Make sure everything is aesthetically pleasing and clearly label and indicate your answers. You do not have to submit these directions. Links to Estimation Techniques Tim Shaughnessy, Chapter 7 -- Demand Estimation and Forecasting, available from Matt Kermode, Explanation of Regression Results, Available at Jason Delaney, Introduction to Multiple Regression, Available at Session Long Project PART 1 In 2006 the CEO of Bear Sterns, James Caynes, received a compensation package of $34 million. The following year Bear Sterns cost $2.7 billion to the taxpayers. In 2006, the CEO of Lehman Brothers received a compensation package of $27 million. On September 15, 2008, Lehman Brothers filed for bankruptcy. The collapse of Lehman Brothers is seen by many as the key event that sparked the Global Financial Crisis. In 2006, the CEO of Citigroup, Charles Prince, received a compensation package of $25 million. Since then the stock price has fallen from $50 a share to $3.5 a share. The CEO of Countrywide Financial, Angelo Mozilo, did even better. His compensation package was $43 million. Angelo Mozilo and two other top executives were charged by the Security and Exchange Commission (SEC) with fraud. According to the SEC, from 2005 through 2007, Countrywide Financial engaged in an unprecedented expansion of its underwriting guidelines and was writing riskier and riskier loans, which these senior executives were warned might ultimately curtail the company's ability to sell them. Countrywide Financial was the third biggest originator of subprime mortgages and the nation's leader in subprime mortgage- backed securities. The tragedy is that these individuals did not make decisions that were in their companies’ best interest. Why? What went wrong? What caused the relation between the CEO and the stockholders to go so badly awry? Discuss. PART 2 Listen 1 of 8 7/17/2016 3:25 PM An important component of this course is experience with analyzing economic data at the managerial level. The computer is a perfect tool for manipulating data and performing statistical analyses. While the focus of BUS 530 is not on learning statistics, this course will utilize and improve your computer skills with a computer assignment designed to illustrate the interconnections between data, information and managerial decisions. The primary software will be Microsoft Excel and the Excel statistical add-in: Data Analysis. Microsoft Excel 2010 (and previous versions) provides a set of data analysis tools called Analysis ToolPak which you can use to save steps when you develop complex statistical analyses. The Excel data analysis tool allows you to perform regression and other statistical tests on your data efficiently. The process involves loading the Analysis ToolPak add-in, entering data, selecting the desired analysis (e.g., regression), and interpreting the output table and significance levels. In the Module 4 SLP assignment you are also asked to estimate a market demand or a cost function (your choice) using the tools of regression analysis and the regression software outlined above. Data are provided for these analyses, including cross-sectional data on housing prices, assessed values, and property characteristics, which can be used to apply demand estimation techniques via classical and hedonic approaches. You are expected to describe the purpose of your analysis, interpret regression coefficients, discuss the significance of results based on ANOVA/F-test, and use Excel tools to support your findings. When writing your report, ensure clarity, professionalism, proper citations, and APA formatting. Include tables and appendices with Excel calculations where appropriate. The report should be approximately 1000 words, include at least 10 credible references, and be structured with an introduction, body, and conclusion.

Paper For Above instruction

The assignment primarily involves performing financial calculations related to a car loan, utilizing Excel functions such as PMT, along with comparative analysis based on various negotiated terms. The core objective is to determine how different modifications to loan conditions—such as a reduced car price, lower interest rate, or shortened loan duration—impact the total cost, total interest paid, and monthly payments. Furthermore, the task requires identifying which scenario offers the greatest savings, lowest total interest, and lowest monthly payments.

To begin, we analyze the original loan terms: a $35,000 loan amount over 60 months at an annual interest rate of 6.5%, compounded monthly. Using the PMT function in Excel, the monthly payment is calculated as =PMT(6.5%/12, 60, -35000). This calculation yields a monthly payment of approximately $678.46. The total cost of the loan is then derived by multiplying this monthly payment by 60 months, resulting in a total payment of roughly $40,707.58. The total interest paid over the loan's duration is the difference between total payments and the original loan amount, amounting to roughly $5,707.58.

Next, to detail the amortization schedule, the monthly balance and interest paid are computed month-by-month. Starting with the initial loan balance of $35,000, each month’s interest is calculated on the previous month’s balance at a rate of 0.5417% (annual rate divided by 12). The monthly interest is added to the previous balance, then the monthly payment is deducted to arrive at the new balance. This process repeats for all 60 months, illustrating how the balance decreases and interest payments vary over time. This schedule highlights how more of the payment gradually goes toward principal as the loan progresses.

The subsequent analysis explores potential savings through negotiation. By adjusting parameters such as a 10% lower car price, a reduced interest rate, or a shorter loan criterion, the calculation of new monthly payments and total costs demonstrates the financial advantage. For example, lowering the car price by 10% to $31,500 reduces the initial loan amount to the same, reflecting directly on lower total payments and interest. Similarly, reducing the interest rate to 6.1% diminishes the monthly payment, ultimately decreasing total interest paid. Shortening the loan term from 60 to 54 months decreases the payment amount per month and total interest, albeit with higher monthly payments.

These adjustments are made easily using the PMT function with varied parameters. Calculations show that opting for the shortest term (54 months) results in the greatest total savings on interest, despite higher monthly payments. Conversely, the option with the most significant reduction in total cost is typically the one with the shortest loan term or the lowest interest rate, depending on the magnitude of change. The Excel sheet must clearly mark these choices, indicating the most advantageous scenarios based on total savings, lowest interest, and lowest monthly payments.

The analysis underscores the importance of understanding how modifying loan conditions affects overall financial outcomes. This exercise helps demonstrate the impact of negotiation and strategic decision-making in financial planning for large purchases. The findings also serve as vital information for consumers to evaluate the benefits of negotiating better terms with lenders.

References

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