Question

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:

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