You can purchase a new building within the city limits for $525,000.
The city will offer a special incentive reducing the price by $25,000.
The city will finance the building over a period of 20 years at a 5.25% APR
Should you pay the loan off 5 years early the city will rebate you an additional 10% of the purchase price
I have figured out what to do, however, I am having a hard time putting this into an Excel Spreadsheet. Please review this method and place the following into a spreadsheet.
Involves borrowing $500,000 ($525,000 minus the 25K incentive) for 15 years at an annual interest rate of 5.25%
PMT formula would look something like this:
=INT/12,TERM*12-Amt Borrowed
You're dividing the Annual Interest Rate by 12 to determine the actual interest that you pay on each payment.
You're multiplying the Term by 12 to determine the Total Number of Payments made
The Amt Borrowed should have a minus sign in front of it in your Function
Once you've calculated your Monthly PMT just multiply it by the Total Number of PMTs made
=TERM*12*PMT to determine the Total Cost of the house
DO NOT forget to subtract $50,000 from it because you paid off the loan in 15 years.
answer should be $673,XXX..94