Determining the interest and principal of a loan over the course of the life of the loan is an important function to assist in making decisions of whether the use of a loan is a good use of capital.
As a financial manager, you have $100,000 to spend on the purchase of land to be developed. Although you have the money to purchase the land, we must forecast the potential return on investment in the purchase and whether purchasing via a loan presents a better return. In five years, the land will potentially appreciate approximately $15,000.
In this recipe, you will learn to use Excel interest and payment functions to determine the amount of interest and payments you will pay within a loan for a specific amount of time.