Upon graduation, Steven purchases a new home theater system for his apartment. T

Question

Upon graduation, Steven purchases a new home theater system for his apartment. To finance the system, he "borrows" $5,000 from a new credit card at 21 percent per year compounded monthly. He fully intends to pay off the "loan" in 1 year while making monthly payments. Develop an Excel table to illustrate the payment amounts and schedule for the loan, assuming payback follows Pay the accumulated interest at the end of each interest period and repay the principal at the end of the loan period. Make-equal principal payments plus interest on the unpaid balance at the end of the period. Make equal end-of-period payments. Make a single payment of principal and interest at the end of the loan period.

Explanation / Answer

Hi,

Please find the answer as follows:

Payment = 5000*(1+.21/12)^12 = 6157.197 or 6157.20

Thanks.

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