SOA Exam FM Sample Question 13
Study guide: Exam FM-2
A loan is amortized over five years with monthly payments at an annual nominal interest rate of 9% compounded monthly. The first payment is 1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 2% lower than the prior payment.
Calculate the outstanding loan balance immediately after the 40th payment is made.
- A) 6750
- B) 6890
- C) 6940
- D) 7030
- E) 7340
Answer this question and see the worked solution
Concepts tested
- Loan Amortization
- Loans
- Amortization
- Outstanding Balance
- Geometric Progression
- Principal
- Term of Loan