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    Calculating EMI of a loan

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    A.) On January 1, 2007, Sammy Sosa offers to buy Mark Grace's used snowmobile for $8,000, payable in 5 equal installments, which are to include 8.25% interest on the unpaid balance and a portion of the principal. If the first payment is to be made on January 1, 2007, how much will each payment be?

    B.) Repeat the requirements in A, assuming Sosa makes the first payment on December 31, 2007.

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    Solution Preview

    Please refer attached file for better understanding of Excel functions.

    Loan amount=Present Value of all future payments=8000
    Rate of interest=8.25%
    Number of ...

    Solution Summary

    Solution describes the steps for calculating equal periodic installment of a loan amount if payments are made in the beginning of period and if payments are made at the end of period. Calculation are made by using financial functions of MS Excel.