Revision as of 23:57, 18 November 2023 by Admin (Created page with "'''Solution: C''' The original monthly payment is <math display = "block">85,000 /a_{\overline{240}|0.005}</math>. On July 1, 2009 there has been 4 years of payments, hence 16x12 = 192 remaining payments. The outstanding balance is The number of remaining payments after refinancing is determined as <math display = "block"> 608.97a_{\overline{240}|0.005} = 608.97(123.2380) = 75, 048.24. </math> The number of remaining payments after refinancing is determined as <math...")
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Exercise


ABy Admin
Nov 18'23

Answer

Solution: C

The original monthly payment is

[[math]]85,000 /a_{\overline{240}|0.005}[[/math]]

. On July 1, 2009 there has been 4 years of payments, hence 16x12 = 192 remaining payments. The outstanding balance is

The number of remaining payments after refinancing is determined as

[[math]] 608.97a_{\overline{240}|0.005} = 608.97(123.2380) = 75, 048.24. [[/math]]

The number of remaining payments after refinancing is determined as

[[math]] \begin{array}{l}{{75,048.24=500a_{\overline{{{n}}}|0.0045}=500\frac{1-1.0045^{-n}}{0.67543=1-1.0045^{-n}}}}\\ {{\qquad\qquad\qquad\qquad\qquad\qquad\qquad\qquad\qquad}}\\ {{n=-\ln(0.32457)/\ln(1.0045)=250.62.}}\end{array} [[/math]]

Thus the final payment will be 251 months from June 30, 2009. This is 20 years and 11 months and so the final payment is May 31, 2030.

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

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