As a graduating senior with a promising career in finance, Central Bank offers you a mortgage of $200,000. You may choose between a 30-year mortgage with an interest rate of 4.375% or a 15-year mortgage at 3.500%. Both interest rates are annual stated rates with interest compounded monthly. Assume that for 30-year mortgage, the bank requires you to pay 1% point. Compute an amortization table that shows the amount of interest you can report for taxes and amount of principal payment each year for each loan. Use two different ways to do it as we did in class: with and without using the functions PPMT and IPMT. PLEASE USE EXCEL and show functions

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Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.