The case is designed to determine and evaluate the payment amount of a car loan and a mortgage, based on your income. If you prefer, you may assume that your household income is $48,000 per year or $4,000 per month. Based on your income, you may spend 28 percent of your monthly income on housing and 10 percent on a car loan. You are to put a 3 percent down payment on the house and a 10 percent down payment on the car. These will make the loan to value of your loans to less than one: 97 percent on the house and 90 percent on the car.
1. Determine the car payment and mortgage payment with the following conditions: your monthly household income, 10 percent for the car payment, and 28 percent for the mortgage payment. Also, assume a 10 percent down payment on the car and a 3 percent down payment on the house.
2. Create an amortization schedule, and graph the components over time: interest, principal, and balance.
3. Discuss the distributions of principal, interest, and the balance over the life of the loan. You must submit your backup in Excel or other supporting documentation showing how answers were reached.