I’m working on a Accounting question and need guidance to help me study.
You just graduated college with your Bachelors Degree and accepted a job offer at your dream company. You decided to celebrate by purchasing the vehicle of your dreams (think big, for this class’s sake. Pictured is a Mercedes Convertible see picture above for $67,300). You have a 720 credit score, therefore you were able to get a 5% interest rate on a 7 year loan. You will be making monthly payments. Using Excel, prepare a professional amortization schedule for the entire 7 years. It must include the payment and the total amount of interest you will pay over the 7 years. (Hint: interest rates are annual, you must convert them to monthly and the periods must be in months, for example, how many months are in 7 years). The Excel cells must contain formulas when appropriate, I recommend cell referencing, both relative and absolute.
Present two additional amortization schedules using 6% and 7%. And be prepared to answer the following questions:
What happens to the total cost for the car (principle and interest) when the interest is increased by only 1 or 2 percent?
What do you think about the reverse side of this, that is to say, receiving this type of interest payments for loaning money to others for these interest rates?
Lastly, indicate if you would purchase a vehicle that costs this much, and why.