You borrowed $737000 to buy your first home. The interest rate is 2 percent compounded monthly, and you will be making the payment weekly. If the amortization is 30 years, complete the first and the last payment rows of the amortization schedule below; that is, find the values for the letters
B= first payment amount
C=first interest portion
D=first principal portion
E=first balance
F=final payment number
G=final payment amount
H=final interest portion
I=final principal portion
J=final balance
K=second last balance
any help would be greatly appreciated I am very stuck
To solve this problem, we need to understand the formulas and calculations involved in the amortization schedule. The amortization schedule is a table that shows the breakdown of each payment made towards a loan, including the payment amount, interest portion, principal portion, and the remaining balance.
First, let's calculate the payment amount and the total number of payments.
Payment Amount (B):
To determine the payment amount, we can use the formula for a loan payment:
B = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
P = Loan principal = $737,000
r = Monthly interest rate = Annual interest rate / 12 = 2% / 12 = 0.02 / 12
n = Total number of payments = Amortization period in years * 12 months = 30 * 12 = 360
Now, let's calculate the payment amount:
B = $737,000 * (0.02/12 * (1 + 0.02/12)^360) / ((1 + 0.02/12)^360 - 1)
You can plug in this equation into a calculator or spreadsheet software to find the value of B.
Next, let's calculate the interest and principal portion for the first payment:
Interest Portion (C):
To find the interest portion of the first payment, we multiply the remaining balance by the monthly interest rate:
C = E * r
Principal Portion (D):
To find the principal portion of the first payment, we subtract the interest portion (C) from the payment amount (B):
D = B - C
Remaining Balance (E):
To find the remaining balance after the first payment, we subtract the principal portion (D) from the initial loan amount (P):
E = P - D
Now let's calculate these values:
C = E * r
D = B - C
E = P - D
To fill in the first and last rows of the amortization schedule, you'll need to use the above formulas repeatedly. Each subsequent row will depend on the values calculated in the previous rows.
For the last payment row, you'll need to calculate the final payment amount, interest portion, principal portion, and remaining balance using the same formulas, but with different inputs.
Note: If you prefer to use software or a spreadsheet, you can create a basic amortization schedule, plug in the formulas, and let the software handle the calculations automatically.
I hope this explanation helps you complete the amortization schedule and find the required values.