Revision as of 00:31, 19 November 2023 by Admin (Created page with "A loan of 10,000 is being repaid by payments of 1,000 at the end of each quarter for as long as necessary, plus a drop payment. The annual nominal rate of interest on the loan is 16% convertible quarterly. Calculate the amount of interest in the tenth payment. <ul class="mw-excansopts"><li>112</li><li>146</li><li>179</li><li>233</li><li>281</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A loan of 10,000 is being repaid by payments of 1,000 at the end of each quarter for as long as necessary, plus a drop payment. The annual nominal rate of interest on the loan is 16% convertible quarterly.
Calculate the amount of interest in the tenth payment.
- 112
- 146
- 179
- 233
- 281
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: B
Principal repaid in the first payment is 1000 – 10,000(0.04) = 600. Therefore, the principle repaid in the tenth payment is 9 600(1.04) 854= and the interest paid is 1000 – 854 = 146.
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.