Your friend Mere knows that you are studying finance and has approached you with the following loan amortization table for a 20-year mortgage loan with level (fixed) annual payments at the end of each period. The annual interest rate is of 2.19%, compounded monthly and the principal amount is $651,000.

Time (Months)	Total Loan Payment ($)	Interest Paid ($)	Principle Paid ($)	Outstanding Loan Balance ($)
				$651,000.00
1	$3,352.20	$1,188.08	$2,164.12	$648,835.88
2	$3,352.20	$1,184.13	$2,168.07	$646,667.80
3	$3,352.20	$1,180.17	$2,172.03	$644,495.77
4	$3,352.20	$1,176.20	$2,175.99	$642,319.78
. . .

240

$3,352.20

$6.11

$3,346.09

$0.00

In your own words, explain to Mere what each column means and how each column is calculated. Use specific formulae and figures (from the first two periods) for illustrations. Your explanations shall include:

i. How Outstanding Loan Balance is calculated? (1 mark)

ii. How Total Loan Payment, Interest Paid and Principal Paid are calculated? (2 marks)

iii. Why the amount of periodic Interest Paid decreases over time and the amount of periodic Principal Paid increases over? (1.5 marks)

iv. Why the outstanding loan balance of the final period is zero. (0.5 mark)