1. Construct an amortization schedule for a 15-year, $300,000 loan with a 4.2% interest rate compounded monthly. The loan will be paid back in 15 years making monthly payments. Calculate the principal payment and interest payment, respectively, of each month. Specifically, update the model from “yearly” payment to “monthly” mortgage payment. 15 years *12 = 180 months. Therefore, demonstrate 180 principal payments and interest payments for each month. 2. Construct an amortization schedule for a 30-year, $300,000 loan with a 6.7% interest rate compounded monthly. The loan will be paid back in 30 years making monthly payments. Calculate the principal payment and interest payment, respectively, of each month. Specifically, update the model from “yearly” payment to “monthly” mortgage payment. 30 years *12 = 360 payments. Therefore, demonstrate 360 principal payments and interest payments for each month. ### Loan Amortization Worksheet ExplanationThis section provides an overview of a Loan Amortization Worksheet, a common tool used in financial education to understand the repayment process of a loan over time.#### Input ValuesAt the top-left of the worksheet, there is a section labeled **"INPUT VALUES"**. Here, you would typically enter the necessary variables to calculate loan amortization. These variables include:- **Present Value of Mortgage**: The total loan amount.- **Interest Rate / Year**: The annual interest rate.- **Interest Rate / Month**: The monthly interest rate.- **Number of Years**: The term of the loan in years.- **Number of Months**: The term of the loan in months.These fields are currently highlighted in yellow and red for emphasis, suggesting the need for data input.#### Amortization ScheduleImmediately below the input values, spanning horizontally across many columns, is the **"Amortization Schedule"**. This schedule is designed to show the detailed breakdown of the loan repayment process. It is structured into several rows and columns:1. **Month**: Represents each month of the loan repayment period.2. **Beginning Principal Balance**: The loan balance at the start of each month.3. **Monthly Payment**: The fixed amount to be paid each month, calculated based on the loan amount, term, and interest rate.4. **Principal**: The portion of the monthly payment that goes toward paying down the principal balance.5. **Interest**: The portion of the monthly payment that covers the interest expense.For each month, the table should calculate how much of the payment is applied to the principal and how much is applied to the interest. Unfortunately, in the displayed worksheet, each value cell currently contains the error indicator `#NUM!`. This error typically occurs in spreadsheets when there is an issue with the formula or the input values may not be correctly specified. #### Error IndicatorsThe `#NUM!` error suggests that the formulas in these cells are experiencing numerical issues, which could be due to:- Incorrect or missing input values.- Inappropriate formula setup for the given loan parameters.### Understanding the DiagramThe provided worksheet appears to be a placeholder template for a detailed loan amortization schedule, yet it is incomplete or incorrectly configured due to the `#NUM!` errors. Typically, completed versions would display numerical values illustrating the amortization over the term of the loan

Amortization schedule refers to the statement showing the details of the loan amount, interest…

Answered: Construct an amortization schedule for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. Construct an amortization schedule for a 15-year, $300,000 loan with a 4.2% interest rate compounded monthly. The loan will be paid back in 15 years making monthly payments. Calculate the principal payment and interest payment, respectively, of each month. Specifically, update the model from “yearly” payment to “monthly” mortgage payment. 15 years *12 = 180 months. Therefore, demonstrate 180 principal payments and interest payments for each month.

2. Construct an amortization schedule for a 30-year, $300,000 loan with a 6.7% interest rate compounded monthly. The loan will be paid back in 30 years making monthly payments. Calculate the principal payment and interest payment, respectively, of each month. Specifically, update the model from “yearly” payment to “monthly” mortgage payment. 30 years *12 = 360 payments. Therefore, demonstrate 360 principal payments and interest payments for each month.

### Loan Amortization Worksheet Explanation

This section provides an overview of a Loan Amortization Worksheet, a common tool used in financial education to understand the repayment process of a loan over time.

#### Input Values
At the top-left of the worksheet, there is a section labeled **"INPUT VALUES"**. Here, you would typically enter the necessary variables to calculate loan amortization. These variables include:

- **Present Value of Mortgage**: The total loan amount.
- **Interest Rate / Year**: The annual interest rate.
- **Interest Rate / Month**: The monthly interest rate.
- **Number of Years**: The term of the loan in years.
- **Number of Months**: The term of the loan in months.

These fields are currently highlighted in yellow and red for emphasis, suggesting the need for data input.

#### Amortization Schedule
Immediately below the input values, spanning horizontally across many columns, is the **"Amortization Schedule"**. This schedule is designed to show the detailed breakdown of the loan repayment process. It is structured into several rows and columns:

1. **Month**: Represents each month of the loan repayment period.
2. **Beginning Principal Balance**: The loan balance at the start of each month.
3. **Monthly Payment**: The fixed amount to be paid each month, calculated based on the loan amount, term, and interest rate.
4. **Principal**: The portion of the monthly payment that goes toward paying down the principal balance.
5. **Interest**: The portion of the monthly payment that covers the interest expense.

For each month, the table should calculate how much of the payment is applied to the principal and how much is applied to the interest. Unfortunately, in the displayed worksheet, each value cell currently contains the error indicator `#NUM!`. This error typically occurs in spreadsheets when there is an issue with the formula or the input values may not be correctly specified.

#### Error Indicators
The `#NUM!` error suggests that the formulas in these cells are experiencing numerical issues, which could be due to:

- Incorrect or missing input values.
- Inappropriate formula setup for the given loan parameters.

### Understanding the Diagram
The provided worksheet appears to be a placeholder template for a detailed loan amortization schedule, yet it is incomplete or incorrectly configured due to the `#NUM!` errors. Typically, completed versions would display numerical values illustrating the amortization over the term of the loan

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