Project 3

Prepare, run, and print a Lotus 123 or Excel program which will calculate a 5 year monthly amortization schedule for the following mortgages:

a. $120,000 fully amortized 30 year mortgage at 7.25% annually.

b. $95,000 GEM based upon a 30 year term initial payment with 6.25% annual interest and annual payment increases of 6%.  (A GEM is a Growing Equity Mortgage.  In a GEM, the annual payment increases by some percentage every year.  The increase in payment is used to pay down the principal thus paying off the loan much more rapidly.  For example, a GEM with only 5% increase in payments every year will pay off a loan which begins with a 30 amortization period in under 15 years.)

The project must be turned in on a floppy diskette along with the print out.  The project is due November 20th.

The amortization table should be organized as follows:

Loan Amount
Annual Interest Rate
Payments Per Year
Amortization Period
Initial Payment*
Annual increase for GEM**
Payment Number Payment Amount Interest Paid Principal Paid Remaining Balance

*This amount should be calculated by the spreadsheet using the values from the cells above.  This way you can change the interest rate or principal amount and automatically the spreadsheet program will compute the new amortization schedule.

**This is only necessary for the Growing Equity Mortgage.