Consider following situation..
You are going to buy this laptop at $1294.00 plus HST. You can also pay $50 a month for 30 months with down payment of $100. Compare following 3 scenarios using spreadsheets to calcuate how much you will pay.
1st Scenario:
Pay Cash
2nd Scenario:
Do monthly payment plan and save remaining money in savings account with interest rate of 1.5%. You're going to withdraw the amount frm this savings account to make ur monthly payment till all of its gone.
3rd Scenario:
Pay with Visa credit card at yearly interest rate of 18%. 30 days after purchase, you make your first payment. Interest starts 30 days after purchase. U will make amount back over 4 months.
Use May 1st as purchase date.
So confused about this assignment.
For the headings. I think I am supposed to have Month, Principal, Payment, To Interest, To Principal, and Principal Left.
I really don't get this:\
To compare the three scenarios in terms of how much you will pay, you need to set up a spreadsheet with the appropriate headings and formulas. Here's how you can set it up:
1. Open a spreadsheet program like Microsoft Excel or Google Sheets.
2. Create a new sheet and label the columns with the following headings: Month, Principal, Payment, To Interest, To Principal, and Principal Left.
3. In the first row under the Month column, enter "0" to represent the initial purchase month (May 1st).
4. Under the Principal column, enter the initial laptop price of $1294.00 for all scenarios.
5. For the Cash scenario, leave the Payment column blank, since you are paying the full amount upfront.
6. For the Monthly Payment scenario, under the Payment column, enter the monthly payment amount of $50 for each subsequent month.
7. For the Visa Credit Card scenario, leave the Payment column blank for the first 30 days (since interest doesn't start until then), and then enter the payment of $323.50 (total divided by 4) under the Payment column for the subsequent four months.
8. For each scenario, use formulas to calculate the other columns as follows:
- To calculate the To Interest column, multiply the previous Principal Left by the interest rate of the respective scenario (e.g., for the Monthly Payment scenario, multiply by 1.5% divided by 12 to get the monthly interest). If the scenario is Cash, enter "0" since there is no interest.
- To calculate the To Principal column, subtract the To Interest from the Payment for each month.
- To calculate the Principal Left column, subtract the To Principal from the previous Principal Left.
9. Copy the formulas down for all 30 months (from May to April of the following year) or until the Principal Left reaches zero for each scenario.
Once you have set up the spreadsheet correctly, you can easily see the total amount paid for each scenario by summing up the Payment column.
I hope this explanation helps you understand how to approach this assignment.