(Odufrey problem) The amount of principal repaid in the 3rd payment of a 5-year level payment loan at 9% is 300. What is the original loan value?

• 1,470
• 1,495
• 1,502
• 1,511
• 1,533

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

Solution: D

Let [math]L[/math] be loan amount and [math]K[/math] be annual payment. Repayment amount in third year is [math]300=K v^3=K(1.09)^{-3}[/math]. Thus [math]K=[/math] [math]300(1.09)^3=388.51[/math]. The loan amount is [math]L=K a_{\overline{5} \mid}=1511.16[/math].

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.