Exercise
ABy Admin
Nov 18'23
Answer
Solution: A
[[math]]
\begin{align*}
699.68=P\nu^{8-5+1}\\ P=842.39~(\textrm{annual payment})\\ P_{1}=\frac{609.68}{1.0475^{4}}=581.14 \\
I_{1}=842.39-581.14=261.25 \\
L =\frac{261.25}{0.0475}=5500 (\textrm{loan amount})
\end{align*}
[[/math]]
Total interest = 842.39(8) - 5500 = 1239.12.
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.