**Mortgage Analysis**

Part I

**(10 points) **Type your name in the title and fill in the terms for each scenario in sheet 1 and 2. **Cells- A6:D6**

** (10 points)**Calculate the monthly payment using the equation for both terms. **Cell- E6**

** (10 points)**Use the built in PMT function in Excel to verify the payment is correct. **Cell- F6**

** (40 points)**Create Amortization tables for both sheets. **Cells- A11:E11 (and down for the length of the mortgage)**

Part II

** (10 points)**In the Investment column calculate the amount of money that will be invested each month for both sheets. Remember once the house is paid off the full $2000 will be invested. **Cells- G11:down for 40 years**

**6**. **(40 points)**In the Accumulation column calculate the balance of the investment each month assuming it grew at an interest rate of 12% per year (**Cell- G6**) over 40 years for both sheets. **Cells- H11:down for 40 years**

**(20 points)**Use the built in FV function of Excel to verify the total amount accumulated in both sheets. Remember at some point the investment amount changes; therefore, you will need to use the FV function more than once. **Final Answer: Cell- H6**

Part III

**(10 points) **Calculate the property taxes for the first ten years assuming they are $2000 for year 1 and rise by 3% each year. **Cells- L6:L15**

**(10 points) **Calculate the total interest paid each year for the first ten years of the loan. Remember the Amortization Schedule is in months and we are constructing this table in years. **Cells- M6:M15**

**(10 points) **The Tax Deduction is the sum of the interest paid for the year and the property tax. Calculate the tax deduction for the first ten years. **Cells- N6:N15**

**(10 points) **We will call the last column Tax Benefit. To simplify calculations let’s assume the couple are in the 25% tax bracket, so the tax deduction will lower their taxes due by approximately 25% of the deduction. However, a person who doesn’t own a house doesn’t pay the property taxes. So, this column will be the difference between the tax savings (25% of the deduction) and the property tax. **Cells- O6:O15**

Part IV

**(20 points) **Write a reflection. Share some of your findings. What did you find interesting? Anything shocking? Are you left with any “what if” questions?

**Note:** If each calculation is built upon functions calling on cells you should be able to adjust any of the terms to see what happens if you change anything. **Cell- K18**

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