Work on the Excel file to answer the following questions a W

Work on the Excel file to answer the following questions:

a. What is the effect of a change in the interest rate from 8 percent to 10 percent in the Worksheet Figure 1?

b. For the original model in Figure 1, what interest rate is required to decrease the monthly payments by 20 percent? What change in the loan amount would have the same effect?

C. In the Worksheet Figure 2, what is the effect of a prepayment of $200 per month? What prepayment would be necessary to pay off the loan in 25 years instead of 30 years?

Answer questions a, b, and c at the Answer worksheet in a clearly labeling sequence. Be sure to explain where and how you get your answers. In specific, you answer should be from your work at the Figure 1 & 2 based upon the initial data.

Thanks.I have provided all the information I have in regards the question, and the answer should be in excel worksheet and to indicate which cell is the result at your answer

F60 A B C D E F Dynamic Loan Calculation Model with Prepayment in Excel $150,000 Loan Amount 7 Interest Rate 8.00% 30 Number of Years 360 Number of Months 11 Interest Rate/Month 0.67% 13 Monthly Loan Payment $1,100.65 14 Excel Spreadsheet Dynamic Model Example of a Simple Loan 17 20 $100.00 21 Total Principle Normal Prepay owed 22 Month Payment Amount Payment 23 $150,000 241 1 $1,100.65 100.00 1,200.65 $149,799 25 2 $1,100.65 100.00 1,200.65 $149,597 261 3 $1,100.65 100.00 $1,200.65 149,394 271 4 $1,100.65 100.00 $1,200.65 149,189 5 $1,100.65 100.00 1,200.65 $148,983 28

Solution

Hi,

Excel sheet was created with the above mentioned data.
Please find answers below:

a. Considering all the above data is same and interest rate is changed from 8% to 10%. Monthly Loan Payment is increased from $1100.65 to $1316.36
Total payment becomes $1416.36
  
b. Interest rate is required to be decreased by 2.2% . i.e., from 8% to 5.8% in order to decrease monthly payment by 20%.
A change of $30,000 i.e., decrease from $150000 to $120000 would reflect the same monthly payment.

c. An increase of PrePayment to $200 will decrease the total number of installments to 221 i.e., loan can be paid off in 221 months.
A prepayment of $58 would be necessary to pay off the loan in 25 years.

The excel sheet is uploaded to https://drive.google.com/file/d/0B-ornhEEYiMva2JKUTAxMWlpTGs/view?usp=sharing