Revision as of 23:55, 18 November 2023 by Admin (Created page with "A loan is amortized with level monthly payments at an annual effective interest rate of 10%. The amount of principal repaid in the 6th month is 500. Calculate the principal repaid in the 30th month. <ul class="mw-excansopts"><li>500</li><li>555</li><li>605</li><li>705</li><li>805</li></ul> {{soacopyright | 2023 }}")
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
ABy Admin
Nov 18'23

Exercise

A loan is amortized with level monthly payments at an annual effective interest rate of 10%. The amount of principal repaid in the 6th month is 500.

Calculate the principal repaid in the 30th month.

  • 500
  • 555
  • 605
  • 705
  • 805

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

ABy Admin
Nov 18'23

Solution: C

Each month the principal paid increases by 1.11/12. Thus, the amount of principal paid increases to 500(1.11/12)30-6=5001.12=605.

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

00