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In this video tutorial, the process of creating an amortization schedule is explained using an example of a $300,000 mortgage with a 30-year term and a 5% annual interest rate starting on July 1, 2020. The number of payments is calculated as 30 years multiplied by 12 months, resulting in 360 monthly payments. The monthly interest rate is determined by dividing the annual rate by 12. To calculate the monthly mortgage payment, the PMT function is used, referencing the monthly rate. This foundational information is essential for setting up an effective amortization schedule for a loan or mortgage.