Quantitative Methods Assignment Example | Topics and Well Written Essays - 2750 words

Quantitative Methods - Assignment ExampleFor calculating the monthly expenses for the both types of owes first the nominal come to grade should be used to calculate the effective annual avocation rates. This is done by use the following formula I=(1+r/x)x-1In order to obtain the effective annual rates the Microsoft Excel formula was used EFFECT(nominal_rate,npery), where nominal_rate is the annual nominal rate and npery is the make sense of compounding times per year.These determine were calculated in Microsoft Excel using the formula PMT(rate,nper,pv,fv,type). Rate is the busy rate of the mortgage, Nper is the entireness number of refunds for the loan, in this upshot 300 months (25*12), Pv is the present grade of the total re recompenses that are to be do, Fv is the future treasure that one wishes to attain after the last repayment, in this case 0 and lastly Type indicates whether the repayment is made at the beginning of the month (0) or at the end (1), in this case w e wear off it is made at the start of the month so 0.In order to evaluate the Interest just Mortgage option we must first calculate the effective annual interest rate on the deposit placed in the drop fund. This will be done in the same focussing as for the Repayment Mortgage. The results are presented in the table belowThe monthly cost Interest unaccompanied mortgage consists of the interest paid over the mortgage period and the amount accumulated in the sinking fund.... epayments for the loan, in this case 300 months (25*12), Pv is the present value of the total repayments that are to be made, Fv is the future value that one wishes to attain after the last repayment, in this case 0 and lastly Type indicates whether the repayment is made at the beginning of the month (0) or at the end (1), in this case we clutch it is made at the start of the month so 0. In order to evaluate the Interest plainly Mortgage option we must first calculate the effective annual interest rate on th e deposit placed in the sinking fund. This will be done in the same panache as for the Repayment Mortgage. The results are presented in the table belowNominal interest rate on deposit in sinking fundNumber of compounding periods per yearEffective annual interest rate on deposit in sinking fund5.50%10.0555.75%10.05756.00%10.066.25%10.06256.50%10.0656.75%10.06757.00%10.077.25%10.07257.50%10.0757.75%10.07758.00%10.088.25%10.08258.50%10.0858.75%10.08259.00%10.09The monthly cost Interest Only mortgage consists of the interest paid over the mortgage period and the amount accumulated in the sinking fund. In order to calculate the monthly payment into the sinking fund using Excel the PPMT(rate,per,nper,pv,fv,type) formula was used where rate is the interest rate per period, per is the period, nper is the total amount of payments in the sinking fund, pv is the present value of the mortgage, fv is the future value expected in our case 0 and type indicates when the monthly payments are due in this case we assume that they are made at the beginning of the period so we take the value 1. The results are listed belowAnnual interest rateNumber of years in the loanAmount of loanPayment into investment jut5.50%25350000