ABy Admin
Nov 26'23

Exercise

A loan of 5000 with interest at 5% per annum effective, will be repaid by payments of 1000 each made at the end of each of the first, second, third, and fourth years and a larger amount sufficient to retire the loan at the end of the fifth year. Find the amount payable at the end of the fifth year.

  • 1856
  • 1213
  • 1617
  • 1315
  • 1380

References

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

ABy Admin
Nov 26'23

Solution: A

The outstanding balance at the end of the fourth year is [math]B=5000(1.05)^4-1000 s_{\overline{4} \mid}=1767.40625[/math] The payment in the fifth year must be [math]B(1+i)=[/math] [math]1767.40625(1.05)=1855.78[/math]

References

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

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