Question

Challenge question: Home mortgages use amortization schedules, but the principal balance might be 10 or 100 times larger than Janet's $3500 trip. They're typically paid back over a period of 30 years at a much lower interest rate (~4%). Explain what you think that amortization schedule might look like.

Answer 1

The Amortization Schedule is a table that lists the computations of a mortgage payment and enables the visualization of the details of each payment.

• Typically, an Amortization Schedule will indicate the dates on which transactions are recorded or captured into the company's accounting records.

• The repayments of the Amortization Schedule occupies three columns, with one indicating the amount of principal repaid while the second column indicates the portion of repayments due to interests on the mortgage. The other column shows the equal periodic payments already settled on the loan.

Thus, the amortization schedule offers an acceptable way to determine the amount of interest paid, the payments made on a mortgage, and the ending balance of the mortgage at the end of the accounting period.

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