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(Created page with "A car dealership offers a 120-month loan for a blue car costing 30,000, with an annual nominal interest rate of 9% compounded monthly and level end-of-month payments. The dealership also offers a loan for a red car costing 33,000, with the same interest rate and end-of-month payments as for the loan for the blue car. Calculate the number of months needed to pay off the loan for the red car <ul class="mw-excansopts"><li>132</li><li>135</li><li>138</li><li>140</li><li>14...") |
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A | A bank offers a loan to each of two borrowers with different credit scores. Both loans are for the | ||
The | same amount. | ||
The first borrower is charged a monthly effective interest rate of 1% and makes level end-of- | |||
month payments of X for n months to pay off the loan. | |||
The second borrower is charged a monthly effective interest rate of 2.01% and makes level end- | |||
of-month payments of 2.01X for 200 months to pay off the loan. | |||
Calculate | Calculate n. | ||
<ul class="mw-excansopts"><li>200</li><li>250</li><li>300</li><li>350</li><li>400</li></ul> | |||
{{soacopyright | 2023 }} | {{soacopyright | 2023 }} | ||
Latest revision as of 09:37, 22 November 2023
A bank offers a loan to each of two borrowers with different credit scores. Both loans are for the same amount. The first borrower is charged a monthly effective interest rate of 1% and makes level end-of- month payments of X for n months to pay off the loan. The second borrower is charged a monthly effective interest rate of 2.01% and makes level end- of-month payments of 2.01X for 200 months to pay off the loan.
Calculate n.
- 200
- 250
- 300
- 350
- 400
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.