Revision as of 14:40, 19 November 2023 by Admin
ABy Admin
Nov 19'23
Exercise
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.
- 200
- 250
- 300
- 350
- 400
Calculate n.
ABy Admin
Nov 19'23
Solution: E
[[math]]
\begin{aligned}
& X a_{\overline{n}| 0.01}=2.01 X a_{\overline{200} \mid 0.0201} \\
& a_{\overline{n} |0.01}=2.01 a_{\overline{200}|0.0201} \\
& a_{\overline{n}| 0.01}=98.13168 \\
& n=400
\end{aligned}
[[/math]]