Answer:
Explanation:
To set up a 2-month amortization table for Kelis and Nathan's $375,000, 15-year mortgage with an APR of 3.75%, we can use the following headings:
Month | Payment | Principal | Interest | Balance
To calculate the monthly payment amount, we can use the following formula:
P = L[c(1 + c)^n]/[(1 + c)^n - 1]
Where:
P = the monthly payment
L = the loan amount ($375,000)
c = the monthly interest rate (APR divided by 12)
n = the total number of payments (15 years multiplied by 12 months per year)
First, we need to calculate the monthly interest rate:
c = 3.75% / 12 = 0.003125
Next, we need to calculate the total number of payments:
n = 15 years x 12 months per year = 180
Now we can plug in these values to the formula:
P = 375000[0.003125(1 + 0.003125)^180]/[(1 + 0.003125)^180 - 1]
P = $2,719.06
So, Kelis and Nathan's monthly payment will be $2,719.06.
To complete the table for the first 2 months, we need to calculate the interest and principal amounts for each payment:
Month 1:
Payment = $2,719.06
Interest = $1,406.25 ($375,000 x 0.003125)
Principal = $1,312.81 ($2,719.06 - $1,406.25)
Balance = $373,687.19 ($375,000 - $1,312.81)
Month 2:
Payment = $2,719.06
Interest = $1,462.97 ($373,687.19 x 0.003125)
Principal = $1,256.09 ($2,719.06 - $1,462.97)
Balance = $372,431.10 ($373,687.19 - $1,256.09)
So, the completed table for the first 2 months would look like this:
Month | Payment | Principal | Interest | Balance
1 | $2,719.06 | $1,312.81 | $1,406.25 | $373,687.19
2 | $2,719.06 | $1,256.09 | $1,462.97 | $372,431.10
We can continue this process to complete the full 15-year amortization table.