SOA Exam FM Sample Question 300
Study guide: Exam FM-2
A loan of 5,000,000 is to be repaid by installments of X at the end of each quarter over a period of ten years. The annual nominal interest rate for the loan is 8% compounded quarterly.
The actual quarterly payment for the first five years is X rounded up to the next higher 1000. After that, each quarterly payment is X rounded up to the next higher 100,000, until the loan is paid off with a drop payment.
Calculate the total number of payments, including the drop payment, needed to repay the loan.
- A) 36
- B) 37
- C) 38
- D) 39
- E) 40
Answer this question and see the worked solution