Revision as of 01:41, 19 November 2023 by Admin (Created page with "A loan of 10,000 is repaid at an annual effective interest rate of 8%, with equal payments made at the end of each year for ten years. The lender immediately deposits each payment into an account earning an annual effective interest rate of 10%. Calculate the total amount of interest earned by the lender during the term of the loan. <ul class="mw-excansopts"><li>11,589</li><li>13,576</li><li>13,751</li><li>14,191</li><li>14,903</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A loan of 10,000 is repaid at an annual effective interest rate of 8%, with equal payments made at the end of each year for ten years. The lender immediately deposits each payment into an account earning an annual effective interest rate of 10%.
Calculate the total amount of interest earned by the lender during the term of the loan.
- 11,589
- 13,576
- 13,751
- 14,191
- 14,903
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: C
Payment equals:
[[math]]
10,000/{a}_{\overline{10}|0.08}=1,490.23
[[/math]]
Accumulated total equals:
[[math]]
1,490.29s_{\overline{{{10}}}|0.10}=23,751.46
[[/math]]
23, 751.46 -10, 000 =13, 751.46
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.