SOA Exam FM Sample Question 203
Study guide: Exam FM-2
A loan for 10,000 is to be repaid by level annual payments at the end of each year for ten years. The annual effective interest rate for the loan is 10%, which the bank uses to compute the annual payment and the balance on the loan at the end of each year. However, for balances during each year, the bank uses an annual simple interest rate of 10%.
Calculate the balance of the loan halfway through the fourth year.
- A) 7434
- B) 7442
- C) 7885
- D) 8310
- E) 8319
Answer this question and see the worked solution