Dagny taggart has just purchased a home and taken out a $400,000 mortgage. The mortgage has a 30minus-year term with monthly payments and has an apr of 5.4%. The total amount of principal that dagny will pay during the first three months of her mortgage is closest to:

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Isaiah

Business

31 December, 11:13

Dagny taggart has just purchased a home and taken out a $400,000 mortgage. The mortgage has a 30minus-year term with monthly payments and has an apr of 5.4%. The total amount of principal that dagny will pay during the first three months of her mortgage is closest to:

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Jacquelyn · Answer 1

First we have to calculate the monthly payment on the mortgage which is calculated as = PMT (rate, nper, pv) in excel

Monthly payment = PMT (0.054/12,30*12,400000) = $2,246.12

To calculate the amount of principal for the first three months, we construct the amortization table as shown below:

Month Payment Interest Principal Outstanding

0 400000

1 $2,246.12 1800 $446.12 $3,99,553.88

2 $2,246.12 1797.992446 $448.13 $3,99,105.75

3 $2,246.12 1795.975857 $450.15 $3,98,655.60

Total Principal $1,344.40

The total amount of principal that dagny will pay during the first three months of her mortgage is closest to: $1,344.40