SOA Exam FM Sample Question 289
Study guide: Exam FM-2
A loan of 1500 is to be repaid with payments made at the end of each year for 20 years. There are two repayment options:
i) Equal payments at an annual effective interest rate of 5%.
ii) Non-level payments of interest on the unpaid balance at an annual effective interest rate of i, plus 75 of principal.
The sum of the payments is the same under the two options.
Calculate i.
- A) 5.26%
- B) 5.51%
- C) 5.76%
- D) 6.01%
- E) 6.26%
Answer this question and see the worked solution