What is the principal portion of the required payment to be made in the first month...

What is the principal portion of the required payment to be made in the first month of a 30-year, 4.9%, $295.8 thousand conventional fixed-rate mortgage? Round to then nearest penny ($0.01)

Expert Solution

Principal payment is $ 361.97

Working:

Loan amount is the present value of monthly payment discounted at monthly interest rate.

Present value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
	=	(1-(1+0.004083)^-360)/0.004083		i	=	4.9%/12	=	0.004083
	=	188.4295199		n	=	30*12	=	360

Loan payment	=	Loan amount	/	Present value of annuity of 1
	=	$ 2,95,800	/	188.4295199
	=	$ 1,569.82

Interest for the first month	=	Loan amount	*	Monthly Interest rate
	=	$ 2,95,800	*	0.004083333
	=	$ 1,207.85

Principal payment	=	Loan payment	-	Interest expense
	=	$ 1,569.82	-	$ 1,207.85
	=	$ 361.97

jeff jeffy answered 2 days ago

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