In cell B12, create a formula using the PMT function to calculate the monthly payments for loan Option A. Use the values in cells B8, B10, and B5 for the Rate, Nper, and Pv arguments, respectively, and do not enter any values for the optional arguments. Copy the formula you created in cell B12 into the range C12:D12. Inception WorkspaceBusiness Loan RequestLoan AmountAnnual Interest RatePayments per YearInterest Rate per PeriodNumber of YearsTotal PaymentsMonthly PaymentsAnnual PaymentsOption A$$Option BOption C300,000 $ 300,000 $ 350,0008.00%6.57%5.99%12120.67%10120$0.55%15180$120.50%20240

Loans are paid by the monthly payments and these monthly payments carry the payment for interest and…

Inception Workspace oan Amount Annual Interest Rate ayments per Year interest Rate per Period Number of Years Total Payments Business Loan Request Option A $ Option B 300,000 $ 300,000 $ 8.00% 6.57% 12 0.67% 10 120 Option C 12 0.55% 15 180 350,000 5.99% 12 0.50% 20 240

Inception Workspace oan Amount Annual Interest Rate ayments per Year interest Rate per Period Number of Years Total Payments Business Loan Request Option A $ Option B 300,000 $ 300,000 $ 8.00% 6.57% 12 0.67% 10 120 Option C 12 0.55% 15 180 350,000 5.99% 12 0.50% 20 240

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 17E

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

100%

In cell B12, create a formula using the PMT function to calculate the monthly payments for loan Option A. Use the values in cells B8, B10, and B5 for the Rate, Nper, and Pv arguments, respectively, and do not enter any values for the optional arguments. Copy the formula you created in cell B12 into the range C12:D12.

Inception Workspace
Business Loan Request
Loan Amount
Annual Interest Rate
Payments per Year
Interest Rate per Period
Number of Years
Total Payments
Monthly Payments
Annual Payments
Option A
$
$
Option B
Option C
300,000 $ 300,000 $ 350,000
8.00%
6.57%
5.99%
12
12
0.67%
10
120
$
0.55%
15
180
$
12
0.50%
20
240

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