 Hello and welcome to the session. In this session we are going to discuss the following question and the question says that Philip has prepared an amortization schedule for his mortgage loan of $18,000 at 7.5% fixed rate for 10 years. The following schedule shows the entries for the first three monthly payments, write the entries for the fourth payment. We calculate the interest portion, principal portion and loan balance for each monthly payment using the formulas. The interest portion of monthly payment is equal to previous month's outstanding principal into the monthly interest rate. The principal portion of monthly payment is equal to monthly payment minus the interest portion of the monthly payment. The loan balance or outstanding principal after each monthly payment is equal to previous month's outstanding principal minus the principal portion of the monthly payment. With this key idea, let us proceed with the solution. In this question, we are given Philip's mortgage loan is of $80,000 at 7.5% interest which is fixed rate of interest. This loan will be repaid in 10 years. We are given his amortization schedule for three payments. Since rate of interest is fixed, so it will remain same in every payment. So the monthly payment will remain same for every month that is $950.40. So for the fourth payment also, this amount remains the same. Now we proceed to fill the remaining columns that is the interest portion, the principal portion and loan balance. So first we find the interest portion. The formula for interest portion is previous month's outstanding principal into the monthly interest rate. So here, previous month's loan balance or the outstanding principal is equal to $78,640.33. Now we calculate the monthly rate of interest. According to the question, the annual rate of interest is equal to 7.5% which is equal to 0.075. So monthly rate of interest is equal to 0.075.12 which is equal to 0.00625. So now the interest portion of fourth month payment is equal to previous month's outstanding principal that is equal to $78,640.33 into monthly interest rate which is 0.00625. This is equal to $491.50. So in the third column that is the interest portion for the fourth month payment we write $491.50. Now we calculate the principal portion. Now we know that the principal portion of monthly payment is equal to monthly payment minus the interest portion of the monthly payment. So here the principal portion of fourth month payment is equal to monthly payment that is $950.40 minus the interest portion of the fourth month payment that is $491.50 which is equal to $458.90. So in the fourth column we write the principal portion of the fourth month payment which is $458.90. Now lastly we calculate the loan balance or the outstanding principal after the fourth month payment. Now we know that the loan balance or the outstanding principal after each monthly payment is equal to previous month's outstanding principal minus the principal portion of the monthly payment. So here the loan balance after fourth month payment is equal to the previous month's loan balance that is $78,640.33 minus the principal portion of the fourth month payment which is $458.90 is equal to $78,181.43. So we write $78,181.43 in the loan balance column for fourth payment. So now we see that for the fourth payment monthly payment is $950.40, interest portion is $491.50, principal portion is $458.90 and loan balance after the fourth payment is $78,181.43. This is the required answer. This completes our session. Hope you enjoyed this session.