Revision as of 14:07, 19 November 2023 by Admin (Created page with "A purchase of 5020 is paid off with a loan at an annual effective interest rate of 6.25%. Payments are made at the end of each year until the loan is paid off. Each payment is 360 except for a final balloon payment, which is less than 720. Calculate the amount of the balloon payment. <ul class="mw-excansopts"><li>611</li><li>630</li><li>649</li><li>667</li><li>685</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A purchase of 5020 is paid off with a loan at an annual effective interest rate of 6.25%. Payments are made at the end of each year until the loan is paid off. Each payment is 360 except for a final balloon payment, which is less than 720.
Calculate the amount of the balloon payment.
- 611
- 630
- 649
- 667
- 685
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: C
[[math]]
\begin{aligned} & 5020=360 a_{\overline{n}|0.0625} \\ & n=33.85 \\ & \text { Use } n=33 \\ & 5020=360 a_{\overline{33} \mid 0.0625}+X v^{33} \\ & 5020=4980.95+X v^{33} \\ & 39.05=X v^{33} \\ & X=288.75 \\ & B=360+288.75=648.75\end{aligned}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.