Construct the amortization of the loan for the twenty years in a spreadsheet to show the interest cost, the
principal reduction, and the ending balance each month.
Complete the amortization schedule below to show the interest cost. the principal reduction, and the
ending balance for month 125 of the loan: (Round to the nearest cent.)
Years for
Loan Amount Interest Rate Loan

Beginning Monthly Interest Principal Extra Ending

Creating an amortization schedule is a fantastic way to visualize how much of your loan is being paid off each month! For a loan of $650,000, you’ll want to start with your interest rate and loan term, which in this case is 20 years. Using the monthly interest rate, you can calculate your monthly payment and subsequently break down the interest cost, principal reduction, and ending balance for each month.

Now, let’s focus on month 125 specifically. To find the beginning balance, you would typically look up the balance from month 124, then calculate the interest (interest rate multiplied by the beginning balance), how much principal you pay off that month, and finally your ending balance (beginning balance minus principal). Each month, this process continues, showing how the interest cost decreases and the principal reduction increases. It’s a journey of pennies and dollars that takes you closer to a zero balance!

To build the rest of your spreadsheet, you can replicate this monthly calculation for all 240 months, giving you a full visual of your financial commitment – and ultimately, it will reveal just how satisfying it feels to chip away at that loan!