Problem
1. AOI Before the Truth in Lending Act, auto dealers used to use a trick called add on interest. Suppose you bought a $30,000 car and financed it over 5 years at 6% interest. To calculate your payment, they'd take $30,000 x 5 years x.06=$9,000. Your monthly payment would be ($30,000+$9,000)/12x5years = $650 per month. Write a spreadsheet that allows the user to enter the amount borrowed, the life of loan in years and the annual interest rate. The spreadsheet calculates the add-on interest payment, what the payment should be if calculated correctly, and the effective annual interest rate on the loan if the add-on interest payment is used.
2. For any loan, loan length (up to 30 years) and interest rate, the spreadsheet calculates monthly payment in the ordinary fashion. Then, the borrower makes ½ a monthly payment every two weeks. (Assume bi-weekly compounding at a rate of r/26). Write a spreadsheet that determines how long it takes to pay off the loan in years.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.