On page 337 of Schweser, how do they get $409,799 - Outstanding loan balance equals the face value of the loan less loan service payments reduce by interest paid? Can someone please show me the math behind it?
Never mind guys I just got some help on it, false alarm. In case someone needs it here is the explanation… total loan = 0.75*577500 = 433125 - 23393 = 409,799 total debt outstanding - total interest paid so far = 31162*4 - 25843-25515-25166-24797 = 23393
They would be using a ammortization table. They say on the page before that it would be given to you. If you did the math, it would be: Mortage payment - (int rate x begining principal) = principal paid month 1 Mortgage balance(0) - principal paid month 1 = mortgage balance month 2 etc etc until you get to the month that you want. For that reason they would supply a ammort table, or give you the balance