A debt is amortized with 120 level payments at the end of each month based on an annual effective interest rate of 8%. The amount of principal in the sixth payment is 600.

Calculate the amount of principal in the 24th payment.

• 532
• 673
• 700
• 704
• 784

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Solution: B

[[math]] \begin{aligned} & \frac{i^{(12)}}{12}=1.08^{1 / 12}-1=0.006434 \\ & 600=P(1 / 1.006434)^{120-6+1} \\ & P=1254.47 \\ & P_{24}=1254.47 v^{120-24+1}=673.42\end{aligned} [[/math]]

Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.