Part 1

Loan Amount $ 40,000.00

a) Yes, we can afford to purchase the car as the monthly payment is of $

Beginning Cumulative
Period Balance Payment Principal Interest Principal
1 $ 40,000.00 ($751.19) ($591.19) $ 160.00 ($591.19)
2 $ 39,408.81 ($751.19) ($593.55) $ 157.64 ($1,184.74)
3 $ 38,815.26 ($751.19) ($595.93) $ 155.26 ($1,780.67)
4 $ 38,219.33 ($751.19) ($598.31) $ 152.88 ($2,378.99)
5 $ 37,621.01 ($751.19) ($600.71) $ 150.48 ($2,979.69)
6 $ 37,020.31 ($751.19) ($603.11) $ 148.08 ($3,582.80)
7 $ 36,417.20 ($751.19) ($605.52) $ 145.67 ($4,188.32)
8 $ 35,811.68 ($751.19) ($607.94) $ 143.25 ($4,796.26)
9 $ 35,203.74 ($751.19) ($610.37) $ 140.81 ($5,406.64)
10 $ 34,593.36 ($751.19) ($612.82) $ 138.37 ($6,019.45)
11 $ 33,980.55 ($751.19) ($615.27) $ 135.92 ($6,634.72)
12 $ 33,365.28 ($751.19) ($617.73) $ 133.46 ($7,252.45)
13 $ 32,747.55 ($751.19) ($620.20) $ 130.99 ($7,872.65)
14 $ 32,127.35 ($751.19) ($622.68) $ 128.51 ($8,495.33)
15 $ 31,504.67 ($751.19) ($625.17) $ 126.02 ($9,120.50)
16 $ 30,879.50 ($751.19) ($627.67) $ 123.52 ($9,748.17)
17 $ 30,251.83 ($751.19) ($630.18) $ 121.01 ($10,378.35)
18 $ 29,621.65 ($751.19) ($632.70) $ 118.49 ($11,011.06)
19 $ 28,988.94 ($751.19) ($635.23) $ 115.96 ($11,646.29)
20 $ 28,353.71 ($751.19) ($637.77) $ 113.41 ($12,284.07)
21 $ 27,715.93 ($751.19) ($640.33) $ 110.86 ($12,924.39)
22 $ 27,075.61 ($751.19) ($642.89) $ 108.30 ($13,567.28)
23 $ 26,432.72 ($751.19) ($645.46) $ 105.73 ($14,212.74)
24 $ 25,787.26 ($751.19) ($648.04) $ 103.15 ($14,860.78)
25 $ 25,139.22 ($751.19) ($650.63) $ 100.56 ($15,511.41)
26 $ 24,488.59 ($751.19) ($653.24) $ 97.95 ($16,164.65)
27 $ 23,835.35 ($751.19) ($655.85) $ 95.34 ($16,820.50)
28 $ 23,179.50 ($751.19) ($658.47) $ 92.72 ($17,478.97)
29 $ 22,521.03 ($751.19) ($661.11) $ 90.08 ($18,140.07)
30 $ 21,859.93 ($751.19) ($663.75) $ 87.44 ($18,803.82)
31 $ 21,196.18 ($751.19) ($666.40) $ 84.78 ($19,470.23)
32 $ 20,529.77 ($751.19) ($669.07) $ 82.12 ($20,139.30)
33 $ 19,860.70 ($751.19) ($671.75) $ 79.44 ($20,811.05)
34 $ 19,188.95 ($751.19) ($674.43) $ 76.76 ($21,485.48)
35 $ 18,514.52 ($751.19) ($677.13) $ 74.06 ($22,162.61)
36 $ 17,837.39 ($751.19) ($679.84) $ 71.35 ($22,842.45)
37 $ 17,157.55 ($751.19) ($682.56) $ 68.63 ($23,525.01)
38 $ 16,474.99 ($751.19) ($685.29) $ 65.90 ($24,210.30)
39 $ 15,789.70 ($751.19) ($688.03) $ 63.16 ($24,898.33)
40 $ 15,101.67 ($751.19) ($690.78) $ 60.41 ($25,589.11)
41 $ 14,410.89 ($751.19) ($693.55) $ 57.64 ($26,282.66)
42 $ 13,717.34 ($751.19) ($696.32) $ 54.87 ($26,978.98)
43 $ 13,021.02 ($751.19) ($699.11) $ 52.08 ($27,678.09)
44 $ 12,321.91 ($751.19) ($701.90) $ 49.29 ($28,379.99)
45 $ 11,620.01 ($751.19) ($704.71) $ 46.48 ($29,084.70)
46 $ 10,915.30 ($751.19) ($707.53) $ 43.66 ($29,792.23)
47 $ 10,207.77 ($751.19) ($710.36) $ 40.83 ($30,502.58)
48 $ 9,497.42 ($751.19) ($713.20) $ 37.99 ($31,215.78)
49 $ 8,784.22 ($751.19) ($716.05) $ 35.14 ($31,931.84)
50 $ 8,068.16 ($751.19) ($718.92) $ 32.27 ($32,650.75)
51 $ 7,349.25 ($751.19) ($721.79) $ 29.40 ($33,372.55)
52 $ 6,627.45 ($751.19) ($724.68) $ 26.51 ($34,097.23)
53 $ 5,902.77 ($751.19) ($727.58) $ 23.61 ($34,824.81)
54 $ 5,175.19 ($751.19) ($730.49) $ 20.70 ($35,555.29)
55 $ 4,444.71 ($751.19) ($733.41) $ 17.78 ($36,288.71)
56 $ 3,711.29 ($751.19) ($736.34) $ 14.85 ($37,025.05)
57 $ 2,974.95 ($751.19) ($739.29) $ 11.90 ($37,764.34)
58 $ 2,235.66 ($751.19) ($742.25) $ 8.94 ($38,506.59)
59 $ 1,493.41 ($751.19) ($745.22) $ 5.97 ($39,251.80)
60 $ 748.20 ($751.19) ($748.20) $ 2.99 ($40,000.00)
monthly payment is of $751.19

Cumulative
Interest Ending Balance
$ 160.00 $ 39,408.81
$ 317.64 $ 38,815.26
$ 472.90 $ 38,219.33
$ 625.77 $ 37,621.01
$ 776.26 $ 37,020.31
$ 924.34 $ 36,417.20
$ 1,070.01 $ 35,811.68
$ 1,213.25 $ 35,203.74
$ 1,354.07 $ 34,593.36
$ 1,492.44 $ 33,980.55
$ 1,628.36 $ 33,365.28
$ 1,761.83 $ 32,747.55
$ 1,892.82 $ 32,127.35
$ 2,021.33 $ 31,504.67
$ 2,147.34 $ 30,879.50
$ 2,270.86 $ 30,251.83
$ 2,391.87 $ 29,621.65
$ 2,510.36 $ 28,988.94
$ 2,626.31 $ 28,353.71
$ 2,739.73 $ 27,715.93
$ 2,850.59 $ 27,075.61
$ 2,958.89 $ 26,432.72
$ 3,064.62 $ 25,787.26
$ 3,167.77 $ 25,139.22
$ 3,268.33 $ 24,488.59
$ 3,366.28 $ 23,835.35
$ 3,461.63 $ 23,179.50
$ 3,554.34 $ 22,521.03
$ 3,644.43 $ 21,859.93
$ 3,731.87 $ 21,196.18
$ 3,816.65 $ 20,529.77
$ 3,898.77 $ 19,860.70
$ 3,978.21 $ 19,188.95
$ 4,054.97 $ 18,514.52
$ 4,129.03 $ 17,837.39
$ 4,200.38 $ 17,157.55
$ 4,269.01 $ 16,474.99
$ 4,334.91 $ 15,789.70
$ 4,398.07 $ 15,101.67
$ 4,458.47 $ 14,410.89
$ 4,516.12 $ 13,717.34
$ 4,570.99 $ 13,021.02
$ 4,623.07 $ 12,321.91
$ 4,672.36 $ 11,620.01
$ 4,718.84 $ 10,915.30
$ 4,762.50 $ 10,207.77
$ 4,803.33 $ 9,497.42
$ 4,841.32 $ 8,784.22
$ 4,876.46 $ 8,068.16
$ 4,908.73 $ 7,349.25
$ 4,938.13 $ 6,627.45
$ 4,964.64 $ 5,902.77
$ 4,988.25 $ 5,175.19
$ 5,008.95 $ 4,444.71
$ 5,026.73 $ 3,711.29
$ 5,041.57 $ 2,974.95
$ 5,053.47 $ 2,235.66
$ 5,062.41 $ 1,493.41
$ 5,068.39 $ 748.20
$ 5,071.38 $ 0.00
Part 1
Loan Amount $ 40,000.00
Interest Rate 4.80%
Payments $900

b) If we make a monthly payment of $900 than we will be able to pay off the loan in 50
We will also be paying a total interest of $4130.62 which will be less as we pay off th

Beginning
Period Balance Payment Principal Interest
1 $ 40,000.00 $900 $740.00 $ 160.00
2 $ 39,260.00 $900 $742.96 $ 157.04
3 $ 38,517.04 $900 $745.93 $ 154.07
4 $ 37,771.11 $900 $748.92 $ 151.08
5 $ 37,022.19 $900 $751.91 $ 148.09
6 $ 36,270.28 $900 $754.92 $ 145.08
7 $ 35,515.36 $900 $757.94 $ 142.06
8 $ 34,757.42 $900 $760.97 $ 139.03
9 $ 33,996.45 $900 $764.01 $ 135.99
10 $ 33,232.44 $900 $767.07 $ 132.93
11 $ 32,465.37 $900 $770.14 $ 129.86
12 $ 31,695.23 $900 $773.22 $ 126.78
13 $ 30,922.01 $900 $776.31 $ 123.69
14 $ 30,145.70 $900 $779.42 $ 120.58
15 $ 29,366.28 $900 $782.53 $ 117.47
16 $ 28,583.75 $900 $785.67 $ 114.33
17 $ 27,798.08 $900 $788.81 $ 111.19
18 $ 27,009.27 $900 $791.96 $ 108.04
19 $ 26,217.31 $900 $795.13 $ 104.87
20 $ 25,422.18 $900 $798.31 $ 101.69
21 $ 24,623.87 $900 $801.50 $ 98.50
22 $ 23,822.37 $900 $804.71 $ 95.29
23 $ 23,017.65 $900 $807.93 $ 92.07
24 $ 22,209.73 $900 $811.16 $ 88.84
25 $ 21,398.56 $900 $814.41 $ 85.59
26 $ 20,584.16 $900 $817.66 $ 82.34
27 $ 19,766.50 $900 $820.93 $ 79.07
28 $ 18,945.56 $900 $824.22 $ 75.78
29 $ 18,121.34 $900 $827.51 $ 72.49
30 $ 17,293.83 $900 $830.82 $ 69.18
31 $ 16,463.00 $900 $834.15 $ 65.85
32 $ 15,628.86 $900 $837.48 $ 62.52
33 $ 14,791.37 $900 $840.83 $ 59.17
34 $ 13,950.54 $900 $844.20 $ 55.80
35 $ 13,106.34 $900 $847.57 $ 52.43
36 $ 12,258.76 $900 $850.96 $ 49.04
37 $ 11,407.80 $900 $854.37 $ 45.63
38 $ 10,553.43 $900 $857.79 $ 42.21
39 $ 9,695.64 $900 $861.22 $ 38.78
40 $ 8,834.43 $900 $864.66 $ 35.34
41 $ 7,969.76 $900 $868.12 $ 31.88
42 $ 7,101.64 $900 $871.59 $ 28.41
43 $ 6,230.05 $900 $875.08 $ 24.92
44 $ 5,354.97 $900 $878.58 $ 21.42
45 $ 4,476.39 $900 $882.09 $ 17.91
46 $ 3,594.30 $900 $885.62 $ 14.38
47 $ 2,708.67 $900 $889.17 $ 10.83
48 $ 1,819.51 $900 $892.72 $ 7.28
49 $ 926.79 $900 $896.29 $ 3.71
50 $ 30.49 $31 $30.49 $ 0.12
e will be able to pay off the loan in 50 month's time.
62 which will be less as we pay off the loan early.

Cumulative Cumulative
Principal Interest Ending Balance
$740.00 $ 160.00 $ 39,260.00
$1,482.96 $ 317.04 $ 38,517.04
$2,228.89 $ 471.11 $ 37,771.11
$2,977.81 $ 622.19 $ 37,022.19
$3,729.72 $ 770.28 $ 36,270.28
$4,484.64 $ 915.36 $ 35,515.36
$5,242.58 $ 1,057.42 $ 34,757.42
$6,003.55 $ 1,196.45 $ 33,996.45
$6,767.56 $ 1,332.44 $ 33,232.44
$7,534.63 $ 1,465.37 $ 32,465.37
$8,304.77 $ 1,595.23 $ 31,695.23
$9,077.99 $ 1,722.01 $ 30,922.01
$9,854.30 $ 1,845.70 $ 30,145.70
$10,633.72 $ 1,966.28 $ 29,366.28
$11,416.25 $ 2,083.75 $ 28,583.75
$12,201.92 $ 2,198.08 $ 27,798.08
$12,990.73 $ 2,309.27 $ 27,009.27
$13,782.69 $ 2,417.31 $ 26,217.31
$14,577.82 $ 2,522.18 $ 25,422.18
$15,376.13 $ 2,623.87 $ 24,623.87
$16,177.63 $ 2,722.37 $ 23,822.37
$16,982.35 $ 2,817.65 $ 23,017.65
$17,790.27 $ 2,909.73 $ 22,209.73
$18,601.44 $ 2,998.56 $ 21,398.56
$19,415.84 $ 3,084.16 $ 20,584.16
$20,233.50 $ 3,166.50 $ 19,766.50
$21,054.44 $ 3,245.56 $ 18,945.56
$21,878.66 $ 3,321.34 $ 18,121.34
$22,706.17 $ 3,393.83 $ 17,293.83
$23,537.00 $ 3,463.00 $ 16,463.00
$24,371.14 $ 3,528.86 $ 15,628.86
$25,208.63 $ 3,591.37 $ 14,791.37
$26,049.46 $ 3,650.54 $ 13,950.54
$26,893.66 $ 3,706.34 $ 13,106.34
$27,741.24 $ 3,758.76 $ 12,258.76
$28,592.20 $ 3,807.80 $ 11,407.80
$29,446.57 $ 3,853.43 $ 10,553.43
$30,304.36 $ 3,895.64 $ 9,695.64
$31,165.57 $ 3,934.43 $ 8,834.43
$32,030.24 $ 3,969.76 $ 7,969.76
$32,898.36 $ 4,001.64 $ 7,101.64
$33,769.95 $ 4,030.05 $ 6,230.05
$34,645.03 $ 4,054.97 $ 5,354.97
$35,523.61 $ 4,076.39 $ 4,476.39
$36,405.70 $ 4,094.30 $ 3,594.30
$37,291.33 $ 4,108.67 $ 2,708.67
$38,180.49 $ 4,119.51 $ 1,819.51
$39,073.21 $ 4,126.79 $ 926.79
$39,969.51 $ 4,130.49 $ 30.49
$40,000.00 $ 4,130.62 $ 0.00
 Part 2
Student Name:
Last number of student Id: 4
Stock Price $115.00
Exercise Price $110.00
Interest Rate 6%
Time To Expiration 0.25
Standard Deviation 50%

1 Value of Call Option

d1 0.3628071
d2 0.1128071

Call Value $14.74

2 Value of Put Option

Put Call Parity $123.10

b) When risk free interest rate (r) increases , the call option price will go up.

c) When Strike price increases, the call option price will go down.

4
a) When Volatility (sigma) increases , the put option price will go up.

b) When risk free interest rate (r) increases , the put option price will go down.

c) When Strike price increases, the put option price will go up.