The prepayment amount is computed as follows:
Prepayment amount = SMM × (beginning mortgage balance for a month − scheduled principal payment for the month) = For March, the prepayment is 0.003 × ($250 million − $3 million) = $741,000.
For April, the starting mortgage balance is $250 million − $3 million − $741,000 = $246.259 million.
The prepayment is 0.003 × ($246.259 million − $3 million) = $729,777.
