As shown in Table 2.5, there are several key terms related to loans and leases. In other words, the bank can take possession of your house if you fail to make loan payments. This is because the house being purchased also serves as collateral to ensure payment. When you borrow money to buy a house, the loan is referred to as a mortgage. The borrower is usually required to pay the principal of the loan plus interest. The amount of money that is borrowed from the lender is called the principal of the loan. However, before demonstrating this function, it is important to cover a few fundamental concepts on loans and leases.Ī loan is a contractual agreement in which money is borrowed from a lender and paid back over a specific period of time. This function calculates the payments required for a loan or a lease. One of the functions we will add to the Personal Budget workbook is the PMT function. This section demonstrates Excel functions used to calculate lease payments for a car and to calculate mortgage payments for a house. Notable items that are missing from the Budget Detail worksheet are the payments you might make for a car or a home. In this section, we continue to develop the Personal Budget workbook. Learn how to summarize data in a workbook by using worksheet links to create a summary worksheet.Use the PMT function to calculate monthly lease payments for an automobile.Use the PMT function to calculate monthly mortgage payments on a house.Understand the fundamentals of loans and leases.
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