SOA Exam FM Sample Question 128
Study guide: Exam FM-2
A 16-year loan of L is repaid with a payment at the end of each year. During the first eight years, the payment is 100. During the final eight years, the payment is 300. Interest is charged on the loan at an annual effective rate of i, such that 1/(1+i)^8 > 0.3.
After the first payment of 100 is made, the outstanding principal is L + 25.
Calculate the outstanding balance on the loan immediately after the eighth annual payment of 100 has been made.
- A) 1660
- B) 1760
- C) 1870
- D) 1970
- E) 2080
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