SOA Exam FM Sample Question 328
Study guide: Exam FM-2
A customer has the option to either buy a car for cash for 15,000 or lease it with a down payment of 1000 and monthly payments of X payable at the end of each month for three years.
Under the purchase option, the car has a value to the customer of 8000 at the end of three years. At the end of the three-year lease, the car is returned and has no value to the customer.
The customer is indifferent to the options at an annual nominal interest rate of 12% convertible monthly.
Calculate X.
- A) 259
- B) 269
- C) 279
- D) 289
- E) 299
Answer this question and see the worked solution