Question

A 15-years 200,000 mortgage has a fixed mortgage rate of 5.8 percent. Estimate the interest portion of the payment in the second month. For example, if you find that the interest portion in the second month is $358.56, type "358.56" in the box.

Answer 1

First, we calculate the installment amount and then we can compute the interest from amortization schedule
P = PMT x (((1-(1 + r) ^- n)) / i)
Where:
P = the present value of an annuity stream	$           200,000.00
PMT = the dollar amount of each annuity payment	To be computed
r = the effective interest rate (also known as the discount rate)	5.96%	((1+5.8%/12)^12-1)
n = the number of periods in which payments will be made	15
i=nominal Interest rate	5.80%
200000=	PMT x (((1-(1 + r) ^- n)) / i)
200000=	PMT * (((1-(1 + 5.96%) ^- 15)) / 5.80%)
Each annuity payment=	200000/ (((1-(1 + 5.96%) ^- 15)) / 5.80%)
Each annual payment=	$             19,987.39
Each monthly payment=	$                1,665.62
Amortization schedule
Month	Opening balance	Interest @ 5.80%/12	Installment	Closing balance
1	$           200,000.00	$                      966.67	$(1,665.62)	$    199,301.05
2	$           199,301.05	$                      963.29	$(1,665.62)	$    198,598.72
Interest portion in the second month is $ 963.29