7) Lenny took out a $31,000 loan, making monthly payments of $400 for 12 years at 5.09% interest. Create the amortization schedule for the first two payments only. Payment Number Principal Portion Interest Portion Total Payment Balance
7) Lenny took out a $31,000 loan, making monthly payments of $400 for 12 years at 5.09% interest. Create the amortization schedule for the first two payments only. Payment Number Principal Portion Interest Portion Total Payment Balance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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---
### Loan Amortization Schedule Example
**Problem Statement:**
Lenny took out a $31,000 loan, making monthly payments of $400 for 12 years at 5.09% interest. Create the amortization schedule for the first two payments only.
**Amortization Schedule Explanation:**
An amortization schedule is a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator. Each payment to the lender will consist of both interest and principal repayment. The interest portion of each payment decreases, and the principal portion increases over time.
For Lenny's loan, the following parameters are provided:
- Loan Amount: $31,000
- Monthly Payment: $400
- Loan Term: 12 years (144 months)
- Annual Interest Rate: 5.09%
The table below shows the payment breakdown for the first two months:
| **Payment Number** | **Principal Portion** | **Interest Portion** | **Total Payment** | **Balance** |
|--------------------|-----------------------|----------------------|-------------------|----------------------|
| 1 | $ | $ | $400 | $ |
| 2 | $ | $ | $400 | $ |
**Calculation Details:**
To fill in the table:
1. **Calculate the Monthly Interest Rate:**
\[
\text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{12}
= \frac{5.09\%}{12} = 0.424167\%
\]
2. **Calculate Interest for First Month:**
\[
\text{First Month's Interest} = \text{Initial Loan Balance} \times \left( \frac{\text{Monthly Interest Rate}}{100} \right)
= 31,000 \times 0.00424167 = 131.49
\]
**Principal Portion for the First Month:**
\[
\text{Principal Portion} = \text{Total Monthly Payment} - \text{First Month's Interest}
= 400 - 131.49 = 268.51
\]
**Balance After First Payment:**
\[
\text{New Balance} = \text{](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd8ed169-c1c5-47a2-b8c0-d7159d8d4fa9%2F57eaad72-43f8-4deb-8f51-d54c40e7ccfe%2F597w25_processed.png&w=3840&q=75)
Transcribed Image Text:Below is the transcription and detailed explanation of the given image content, formatted for educational purposes on a website:
---
### Loan Amortization Schedule Example
**Problem Statement:**
Lenny took out a $31,000 loan, making monthly payments of $400 for 12 years at 5.09% interest. Create the amortization schedule for the first two payments only.
**Amortization Schedule Explanation:**
An amortization schedule is a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator. Each payment to the lender will consist of both interest and principal repayment. The interest portion of each payment decreases, and the principal portion increases over time.
For Lenny's loan, the following parameters are provided:
- Loan Amount: $31,000
- Monthly Payment: $400
- Loan Term: 12 years (144 months)
- Annual Interest Rate: 5.09%
The table below shows the payment breakdown for the first two months:
| **Payment Number** | **Principal Portion** | **Interest Portion** | **Total Payment** | **Balance** |
|--------------------|-----------------------|----------------------|-------------------|----------------------|
| 1 | $ | $ | $400 | $ |
| 2 | $ | $ | $400 | $ |
**Calculation Details:**
To fill in the table:
1. **Calculate the Monthly Interest Rate:**
\[
\text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{12}
= \frac{5.09\%}{12} = 0.424167\%
\]
2. **Calculate Interest for First Month:**
\[
\text{First Month's Interest} = \text{Initial Loan Balance} \times \left( \frac{\text{Monthly Interest Rate}}{100} \right)
= 31,000 \times 0.00424167 = 131.49
\]
**Principal Portion for the First Month:**
\[
\text{Principal Portion} = \text{Total Monthly Payment} - \text{First Month's Interest}
= 400 - 131.49 = 268.51
\]
**Balance After First Payment:**
\[
\text{New Balance} = \text{
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