 Hello and welcome to the session. In this session we are going to discuss the following question and the question says that Venus purchased a home with $75,000 mortgage at 4.5% for 15 years. If the monthly payment of her loan is $573.75, prepare an amortization schedule for the first two months of her loan. In this question we are given that Venus has taken mortgage loan of $75,000 for 15 years at 4.50 rate of interest and the monthly payment of her loan is $573.75. We have to form an amortization schedule for the first two months of her loan. Here the original principal is equal to $75,000. The monthly payment is equal to $573.75 which includes both the principal and the interest. Since the rate of interest is fixed so monthly payment of loan will remain same every month. Now let us calculate the monthly rate of interest. The annual rate of interest is equal to 4.5% which is equal to 0.045 so monthly rate of interest is equal to 0.045 upon 12 which is equal to 0.00375. Now we calculate the interest portion, principal portion and the loan balance for the first monthly payment. The interest portion for the first month payment is equal to original principal into monthly interest rate. So here the interest portion for first month payment is equal to the original principal that is $75,000 into the monthly interest rate that is 0.00375 which is equal to $281.25. Now the principal portion of first month payment is equal to monthly payment minus the interest portion of first month. So here the principal portion for the first month is equal to monthly payment which is $573.75 minus the interest portion of the first month which is $281.25. This is equal to $292.50. Now the loan balance after first month is equal to original principal minus the principal portion of the first month. So here the loan balance is equal to original principal which is $75,000 minus the principal portion of the first month which is $292.50 that is equal to $74,707.50. Now we fill the first row on the table. The number of payment is 1. The monthly payment is $573.75. The interest portion is $281.25. The principal portion is $292.50 and the loan balance is $74,707.50. Now we will calculate the interest portion, principal portion and loan balance for second month payment. The interest rate for second month payment is equal to previous month's loan balance into monthly interest rate which is equal to $74,707.50 into $0.00375 which is equal to $280.15. The principal portion of second month payment is equal to monthly payment minus interest portion of the monthly payment which is equal to $573.75 minus $280.15 which is equal to $293.60. The outstanding principal or the loan balance is equal to previous month's outstanding principal minus principal portion of the monthly payment which is equal to $74,707.50 minus $293.60 which is equal to $74,413.90. Now we fill all the values of second month payment in their respective columns in the amortization schedule table. The number of payment is 2 so we write 2 in the first column. The monthly payment is the same that is $573.75. The interest portion is $280.15. The principal portion is $293.60 and the outstanding principal is $74,413.90.