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    Loan Amortization Schedule Comparison Project

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    Develop a loan amortization project using Excel spreadsheets. This can be a car loan or a home mortgage. You will develop two alternative loan schedules using realistic rates and repayment schedules and write up a comparison of your two amortization schedules. This involves two tables and two line graphs displaying the decrease in principal.

    1. Open the spreadsheet, plan which two loans you want to compare.

    2. Fill in the cells for loan amount, rate, and years for the loan.

    3. Create two line graphs for the ending balance. Please label the bottom or x axis and the left of the graph or y axis. Write a title across the top.

    4. Use the CTRL button to select years and ending balance COLUMNS

    5. Insert a line graph, choose the first picture of a line graph. REPEAT for the second loan.

    6. Delete the blue points from the graph, label the left side "Ending Balance".

    7. In Microsoft Word, write about the trends you see in the amortization table in two paragraphs. My Suggestions: Write another two paragraphs about the second amortization table. Then write your last two paragraphs comparing the two tables.

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    SOLUTION This solution is FREE courtesy of BrainMass!

    Your first step would be to identify the loans you want to compare and create your amortization schedules. To access the amortization template in excel click on file/new, then if you are using office 2003 click on templates/business templates/amortization schedule. If you are using office 2010 after you click on new click on Schedules under the Microsoft online section, then Loan Amortization schedule. Fill in the information pertaining to the loans of your choice. Once all the pertinent loan information is entered your amortization schedule will appear.

    To create your graph you first want to create your data table. The first column in your graph should consist of your independent variable. In this case that would either be period (number of months or years) of loan or the ending balance each year or each month. The next two columns should contain the dependent variable from each of your two amortization schedules. Once you have completed your data table you want to highlight the table and click on insert chart to start the chart wizard. The wizard is very user friendly, just follow along with the prompts to creating your graph. Both sets of data should appear side by side on the graph making it much easier to compare the two amortization schedules.
    Once your graph is created, you can format it by double clicking on it and selecting another chart style.

    Some suggestions for the loan alternatives would be
    1. Car loans a loan for 36 months vs. one for 60 months at the same interest rate on the same principal amount.
    2. Mortgage loan - you can compare a 15 year mortgage to a 30 year mortgage at the same interest rate on the same principal amount.

    Outline for Essay
    I. Introduction - you can state in your introduction the type of loan you chose to make your comparison and why. Here would be a good place to define what an amortization loan is and how it differs from a revolving loan such as a credit card.

    II. Body - Here you want to state your variables and describe the differences between the two graphs (the two loans) for example which has a higher payment, which one gets paid off faster, which one costs the borrower more. For example, a loan can have a lower payment but cost the borrower more because of the total amount of interest paid.

    III. Conclusion - Here you can add any additional points you want to make and then sum everything up.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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