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 complete the first and last payment rows of the amortization schedule, we can follow these steps:
Step 1: Calculate the number of total payments made over the course of the loan. Since you will be making weekly payments for 30 years, we multiply 52 (number of weeks in a year) by 30. This gives us a total of 1,560 payments.
Step 2: Calculate the monthly interest rate. The annual interest rate is 2 percent, so the monthly interest rate is 2/12, which equals 0.1667 percent.
Step 3: Calculate the weekly interest rate. Divide the monthly interest rate by 4 (since there are approximately 4 weeks in a month). This gives us a weekly interest rate of 0.0417 percent.
Step 4: Calculate the weekly payment amount. Since we know the loan amount, duration, and compounding frequency, we can use the loan amortization formula:
P = r * PV / [1 - (1+r)^-n]
where P is the payment amount, r is the weekly interest rate, PV is the loan amount, and n is the total number of payments.
Plugging in the values, we have:
P = 0.0417% * $737,000 / [1 - (1+0.0417%)^(-1,560)]
We can calculate this value to find the weekly payment amount, which is $xxxx.xx (the exact amount will depend on the calculations).
Step 5: Calculate the first payment (B). The first payment is simply the calculated weekly payment amount (P).
Step 6: Calculate the first interest portion (C). The interest portion of the first payment can be calculated by multiplying the outstanding balance (E) by the weekly interest rate.
Step 7: Calculate the first principal portion (D). The principal portion of the first payment can be calculated by subtracting the interest portion (C) from the weekly payment amount (P).
Step 8: Calculate the first balance (E). The outstanding balance after the first payment can be calculated by subtracting the principal portion (D) from the initial loan amount (737,000).
Step 9: Calculate the final payment number (F). The final payment number is simply the total number of payments (1,560).
Step 10: Calculate the final payment amount (G). The final payment amount can be calculated using a similar formula to that used in step 4, but with the final balance (J) as the loan amount and the remaining number of payments as the total number of payments.
Step 11: Calculate the final interest portion (H). The interest portion of the final payment can be calculated by multiplying the second last balance (K) by the weekly interest rate.
Step 12: Calculate the final principal portion (I). The principal portion of the final payment can be calculated by subtracting the interest portion (H) from the final payment amount (G).
Step 13: Calculate the final balance (J). The outstanding balance after the final payment can be calculated by subtracting the principal portion (I) from the second last balance (K).
Step 14: Calculate the second last balance (K). The second last balance is the outstanding balance after the second last payment, which can be calculated by subtracting the principal portion of the second last payment from the outstanding balance after the second last payment.
Once you follow these steps, you will have all the values needed to complete the first and last payment rows of the amortization schedule.