Revision as of 15:36, 19 November 2023 by Admin (Created page with "'''Solution: A''' Define <math>i^{\prime}</math> as the quarterly effective interest rate for the loan Solve for <math>i^{\prime}</math> <math display="block"> \begin{aligned} & 291.23 a_{\overline{20} \mid i^{\prime}}=5000 \\ & i^{\prime}=1.5 \% \end{aligned} </math> Then, solve for <math>j</math> using the formula <math display="block"> \begin{aligned} & \left(1+\frac{j}{12}\right)^{12}=(1+0.015)^4 \\ & j=0.0597 \end{aligned} </math> {{soacopyright | 2023 }}")
Exercise
ABy Admin
Nov 19'23
Answer
Solution: A
Define [math]i^{\prime}[/math] as the quarterly effective interest rate for the loan Solve for [math]i^{\prime}[/math]
[[math]]
\begin{aligned}
& 291.23 a_{\overline{20} \mid i^{\prime}}=5000 \\
& i^{\prime}=1.5 \%
\end{aligned}
[[/math]]
Then, solve for [math]j[/math] using the formula
[[math]]
\begin{aligned}
& \left(1+\frac{j}{12}\right)^{12}=(1+0.015)^4 \\
& j=0.0597
\end{aligned}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.