EXP ECH02 H3 - Mortgage Calculator 1.3
As a financial consultant, you work with people who are planning to buy a new house. You want to create a worksheet containing variable data (the price of the house, down payment, date of the first payment, and borrower’s credit rating) and constants (property tax rate, years, and number of payments in one year). Borrowers pay 0.5% private mortgage insurance (PMI) of the loan amount if they do not make at least a 20% down payment. A borrower’s credit rating determines the required down payment percentage and APR. For example, a person with an excellent credit rating may make only a 5% down payment with a 3.25% APR loan. A per-son with a fair credit rating will make a 15% down payment and have a higher APR at 5.25%. Your worksheet needs to perform various calculations. The filled cells in column F indicate cells containing formulas, not values.
For the purpose of grading the project you are required to perform the following tasks:
Start Excel. Download and open the file namede02_grader_h3.xlsx.
On the Payment worksheet, assign the range name Table to the range A17:C20.
In cell F4, enter a lookup function to calculate the APR Based on Credit Rating. Include the range_lookup argument to ensure an exact match. Use range names for the first two arguments in the function.
In cell F5, enter a lookup function and formula to calculate the Minimum Down Payment Required amount. Include the range_lookup argument to ensure an exact match. Use range names for the first two arguments in the function and for calculation after the closing parenthesis. For example, a borrower who has an Excellent rating is required to pay a minimum of 5% down payment of the negotiated purchase price. Multiply the function results by the negotiated cost of the house
In cell F6, enter a formula to calculate the Annual Property Tax based on the negotiated cost of the house and the annual property tax rate. Use range names in the formula.
In cell F10, enter a formula to calculate the Total Down Payment, which is sum of the required minimum down payment (calculated previously) and any additional down payment entered in the Inputs section. Use range names in the formula.
In cell F11, enter a formula to calculate the Amount of the Loan, which is the difference between the negotiated cost of the house and the total down payment. Use range names in the formula.
In cell F7, enter an IF function to calculate the Annual PMI. If the borrower’s total down payment (required and additional) is 20% or more of the negotiated purchase price (multiply the cost by the PMI avoidance percentage), PMI is zero. If the total down payment is less than 20%, the borrower has to pay PMI calculated by multiplying the amount of the loan by the PMI rate. Use range names whenever possible in the function.