Revision as of 12:31, 19 November 2023 by Admin (Created page with "A loan of 4000 has an annual effective interest rate of 5%. The loan is repaid by payments of 250 at the end of each year for ten years along with a final balloon payment at the end of the eleventh year. Calculate the outstanding loan balance at the beginning of the seventh year. <ul class="mw-excansopts"><li>3593</li><li>3660</li><li>3790</li><li>3856</li><li>3910</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A loan of 4000 has an annual effective interest rate of 5%. The loan is repaid by payments of 250 at the end of each year for ten years along with a final balloon payment at the end of the eleventh year.
Calculate the outstanding loan balance at the beginning of the seventh year.
- 3593
- 3660
- 3790
- 3856
- 3910
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: B
Using the retrospective method:
[[math]]
\begin{array}{c}{{4000(1.05)^{6}-250s_{\overline{6}|0.05}}}\\ {{5360.38-1700.48=3659.90}}\end{array}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.