1. Business
2. Finance
3. Interest Rates and the Cost of Debt
4. 34966

Instruction:

** Review the attached document **

- Recreate the last spreadsheet shown in the attached document.
- The formulas for the cells E10, E11, and E13 are shown in the last spreadsheet in the attached document.

Note:

- The PMT() function displays the Monthly Loan Payment amount as a negative value, not as a positive value as shown in the attached document, so you will need to use a negative $1000 (-1000) as your target value for the following problem.

Problem:

-Once you have recreated the spreadsheet, use Excel's Goal Seek tool to answer the following three questions.
-What interest rate will reduce the monthly loan payment to $1,000? (Make a note of the new value for the loan amount (cell E6). Undo the result of the goal-seeking analysis to return to the original values shown in the last spreadsheet in the attached document. Record the resulting value in cell B15.)
- What loan amount can you afford if you can only make a monthly loan payment of $1,000? (Make a note of the new value for the loan amount (cell E6). Undo the result of the goal-seeking analysis to return to the original values shown in the last spreadsheet in the attached document. Record the resulting value in cell B16.)
- How many years would you have to finance the loan to make the monthly loan payment be $1,000? (Record the resulting value in cell B17 and return the saved file.)

Attachments

• Goal Seeking.doc