Prepare the first row of a loan amortization schedule based on the following information; the loan...

Prepare the first row of a loan amortization schedule based on the following information; the loan amount is for $17,246 with an annual interest rate of 6%. the loan will be repaid over 38 years with monthly payments.

What is the loan payment?
What portion of this payment is Interest?
What portion of this payment is principal?
What is the loan balance after the first monthly payment?

Solutions

Expert Solution

Loan Amount = $17,246

Calculating the monthly Loan Payment:-

Where, P = Loan amount = $17,246

r = Periodic Interest rate = 6%/12 = 0.5%

n= no of periods = 38 years*12 = 456

Monthly Payment = $96.12

- Preparing the Amortization table of the first month of Loan:-

Year	Beg bal.	Payment	Interest amount	Principal Amount	End Bal.
1	17,246.00	96.12	86.23	9.89	17,236.11

2) .Portion of this payment is Interest = $86.23

3). Portion of this payment is principal = $9.89

4). Loan balance after the first monthly payment = $17,236.11

Note- The following Columns are calculated based on:

- Interest amount = beg. Balnace*Monthly interest rate

- Principal maount = Payment - Interest amount

- End Bal. = Beg. Bal + Interest - Payment

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jeff jeffy answered 1 year ago

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