Suppose you borrow $498,500 at 3.6% annual interest compounded monthly, for 15 years. First, find the monthly payment. Then, fill in the following amortization schedule.
The monthly payment is $
. (Round to the nearest cent)
Round the table values to the nearest cent.
Month Interest Payment Principal Payment Loan Balance
1 $
$
$
2 $
$
$
3 $
$
$
To find the monthly payment, we can use the formula for calculating the monthly payment for a loan:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
The Monthly Interest Rate is the annual interest rate divided by 12 (the number of months in a year). So, the Monthly Interest Rate is 3.6% / 12 = 0.003.
Number of Payments is the total number of months for the loan, which in this case is 15 years * 12 months = 180 months.
Using these values in the formula, we can calculate the monthly payment:
Monthly Payment = (498500 * 0.003) / (1 - (1 + 0.003)^(-180))
Monthly Payment = 1495.5 / (1 - 0.3723565604)
Monthly Payment = 1495.5 / 0.6276434396
Monthly Payment = 2380.89
So, the monthly payment is $2380.89. (Rounded to the nearest cent)
Now, let's fill in the amortization schedule:
Month Interest Payment Principal Payment Loan Balance
1 $1,828.25 $552.64 $497,947.36
2 $1,827.05 $553.84 $497,393.52
3 $1,825.85 $555.04 $496,838.48