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What is the maximum car payment and mortgage payment

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Reference no: EM13305161

The scenario is designed to help you determine and evaluate the payment amount of a car loan and a mortgage, based on the assumption that your household income is $36,000 per year or $3,000 per month. Based on your income, you may spend 28% of your monthly income on housing, and 10% on a car loan. You are to put a 3% down payment on the house and a 10% down payment on the car.

1. What is the maximum car payment and mortgage payment you can afford with the following conditions: your monthly household income, 10% for the car payment, and 28% for the mortgage payments?

2. Assume a 10% down payment on the car and a 3% down payment on the house. Also, assume that you can get financing for the car at 7% for 60 months, and the house can be financed at 5% for 30 years.

How much could you spend on the car and the house? You must submit your calculations in a Microsoft Excel document showing how answers were reached.

3. Create a complete amortization schedule for the car, using the information in questions 1 and 2.

4. Discuss the distributions of principal, interest and the balance over the life of the loan.

Over the life of the loan, the amount of the $300 that goes to interest gets smaller and the amount that goes to principal gets larger.

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Reference no: EM13305161

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