I am trying to estimate the cash flows of Mortgage Backed Security. The example is present in the Fixed Income textbook written by Fabozzi.
The problem and the solution is as follows:-
Suppose there is a $400 million mortgage pass-through security with a 7.5% pass-through rate, a weighted average coupon of 8.125% and a weighted average maturity of 357 months, how to compute the cash flows for the next two months assuming a 100 Principal Securities Association(PSA)?
I have understood the values for all the columns except for column 5. Could anyone how did the value of $2,975,868 come up in the scheduled mortgage payment for month 1?
Even the text book does not provide any references with respect to this.