Amortization Schedules This project requires you to create an amortization sched
ID: 2616264 • Letter: A
Question
Amortization Schedules
This project requires you to create an amortization schedule for two types of loans, a fully amortizing
constant payment mortgage (CPM) loan and a constant amortizing (CAM) loan. In your report, compare
the amortization schedule of the CPM and CAM loans (How are they similar? How are they different?
Which would you prefer and why?)
Part 1: Monthly Payment
Consider a $10,000 loan made at a 12 percent annual (nominal) rate of interest for 3 years.
A) Calculate the constant monthly mortgage payments on this loan, assuming it is to be fully
amortized at the end of 3 years. Be sure to use the excel PMT function to calculate the monthly
payment (see https://support.office.com/en-us/article/PMT-function-0214da64-9a63-4996-
bc20-214433fa6441) (10 Points)
Part 2: CPM Loan
Consider a $10,000 fully amortizing CPM loan made at a 12 percent annual (nominal) rate of interest for
3 years.
B) Fill in the amortization schedule for each month (calculate or fill in the values of beginning loan
balance, monthly payment, interest, amortization, and ending loan balance). Be sure to show
calculations if needed (i.e. do not simply type in values but reference other cells to compute the
calculations) (30 points)
Part 3: CAM Loan
Consider a $10,000 CAM loan made at a 12 percent annual (nominal) rate of interest for 3 years.
C) Fill in the amortization schedule for each month (calculate or fill in the values of beginning loan
balance, monthly payment, interest, amortization, and ending loan balance). Be sure to show
calculations if needed (i.e. do not simply type in values but reference other cells to compute the
calculations) (30 points)
Excel Note: If you want to lock in a cell reference, use the $ symbol. For example, if you would like to keep
the value of cell A5 constant for use in a formula, reference it as $A$5. See https://support.office.com/enus/article/Switch-between-relative-absolute-and-mixed-references-dfec08cd-ae65-4f56-839e5f0d8d0baca9
Part 1: A) Monthly payme
number of periods=
Monthly payment =
Part 2: B) Amortization scheduled CPM
Part 3. C ) Amortization schedule CAM
Loan amount = nominal rate = number of yrs = periodic rate =number of periods=
Monthly payment =
Explanation / Answer
-0.08
Under constant payment mortgage that a constant amount is calculated on the original loan amount which is at fixed rate, for fixed time period, the amortization amount varies each month while in constant amortization payment the amortization amount remains constant over the period and the interest is calculated differently on the balance remaining after deducting the amortization of loan while in both the loans the amount of loan equals zero.
Part 1 Loan $10000 Interest Rate 12% No of Yrs 3 yrs Using the PMT function in excel we get Monthly Rate 12/12 1% NPER 3*12 36 PV 10000 The constant monthly mortgage payments on this loan is $332.14 Part 2 Loan $10000 Monthly Interest Rate 1% No of yrs 3 yrs NPER 36 Months Beginning Loan Balance Monthly Payment Interest(Beginning Loan Balance * 1%) Amortization(monthly Payment - Interest) Ending Loan Balance(Beginning Loan Balance - Amortization) 1 10,000.00 332.14 100.00 232.14 9,767.86 2 9,767.86 332.14 97.68 234.46 9,533.40 3 9,533.40 332.14 95.33 236.81 9,296.59 4 9,296.59 332.14 92.97 239.17 9,057.42 5 9,057.42 332.14 90.57 241.57 8,815.85 6 8,815.85 332.14 88.16 243.98 8,571.87 7 8,571.87 332.14 85.72 246.42 8,325.45 8 8,325.45 332.14 83.25 248.89 8,076.56 9 8,076.56 332.14 80.77 251.37 7,825.19 10 7,825.19 332.14 78.25 253.89 7,571.30 11 7,571.30 332.14 75.71 256.43 7,314.88 12 7,314.88 332.14 73.15 258.99 7,055.88 13 7,055.88 332.14 70.56 261.58 6,794.30 14 6,794.30 332.14 67.94 264.20 6,530.11 15 6,530.11 332.14 65.30 266.84 6,263.27 16 6,263.27 332.14 62.63 269.51 5,993.76 17 5,993.76 332.14 59.94 272.20 5,721.56 18 5,721.56 332.14 57.22 274.92 5,446.63 19 5,446.63 332.14 54.47 277.67 5,168.96 20 5,168.96 332.14 51.69 280.45 4,888.51 21 4,888.51 332.14 48.89 283.25 4,605.25 22 4,605.25 332.14 46.05 286.09 4,319.17 23 4,319.17 332.14 43.19 288.95 4,030.22 24 4,030.22 332.14 40.30 291.84 3,738.38 25 3,738.38 332.14 37.38 294.76 3,443.62 26 3,443.62 332.14 34.44 297.70 3,145.92 27 3,145.92 332.14 31.46 300.68 2,845.24 28 2,845.24 332.14 28.45 303.69 2,541.55 29 2,541.55 332.14 25.42 306.72 2,234.83 30 2,234.83 332.14 22.35 309.79 1,925.04 31 1,925.04 332.14 19.25 312.89 1,612.15 32 1,612.15 332.14 16.12 316.02 1,296.13 33 1,296.13 332.14 12.96 319.18 976.95 34 976.95 332.14 9.77 322.37 654.58 35 654.58 332.14 6.55 325.59 328.98 36 328.98 332.14 3.29 328.85 0.13 Part 3 Under CAM loan, monthly principal payment would be 10000/36 which would be 277.78 Months Beginning Loan Balance Monthly Payment(Interest + Constant amortization) Interest(Beginning Loan Balance * 1%) constant Amortization Ending Loan Balance(Beginning Loan Balance - Amortization) 1 10,000.00 377.78 100.00 277.78 9,722.22 2 9,722.22 375.00 97.22 277.78 9,444.44 3 9,444.44 372.22 94.44 277.78 9,166.66 4 9,166.66 369.45 91.67 277.78 8,888.88 5 8,888.88 366.67 88.89 277.78 8,611.10 6 8,611.10 363.89 86.11 277.78 8,333.32 7 8,333.32 361.11 83.33 277.78 8,055.54 8 8,055.54 358.34 80.56 277.78 7,777.76 9 7,777.76 355.56 77.78 277.78 7,499.98 10 7,499.98 352.78 75.00 277.78 7,222.20 11 7,222.20 350.00 72.22 277.78 6,944.42 12 6,944.42 347.22 69.44 277.78 6,666.64 13 6,666.64 344.45 66.67 277.78 6,388.86 14 6,388.86 341.67 63.89 277.78 6,111.08 15 6,111.08 338.89 61.11 277.78 5,833.30 16 5,833.30 336.11 58.33 277.78 5,555.52 17 5,555.52 333.34 55.56 277.78 5,277.74 18 5,277.74 330.56 52.78 277.78 4,999.96 19 4,999.96 327.78 50.00 277.78 4,722.18 20 4,722.18 325.00 47.22 277.78 4,444.40 21 4,444.40 322.22 44.44 277.78 4,166.62 22 4,166.62 319.45 41.67 277.78 3,888.84 23 3,888.84 316.67 38.89 277.78 3,611.06 24 3,611.06 313.89 36.11 277.78 3,333.28 25 3,333.28 311.11 33.33 277.78 3,055.50 26 3,055.50 308.34 30.56 277.78 2,777.72 27 2,777.72 305.56 27.78 277.78 2,499.94 28 2,499.94 302.78 25.00 277.78 2,222.16 29 2,222.16 300.00 22.22 277.78 1,944.38 30 1,944.38 297.22 19.44 277.78 1,666.60 31 1,666.60 294.45 16.67 277.78 1,388.82 32 1,388.82 291.67 13.89 277.78 1,111.04 33 1,111.04 288.89 11.11 277.78 833.26 34 833.26 286.11 8.33 277.78 555.48 35 555.48 283.33 5.55 277.78 277.70 36 277.70 280.56 2.78 277.78-0.08
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