SOA Exam FM Sample Question 329
Study guide: Exam FM-2
A loan of 20,000 is to be repaid with ten increasing installments payable at the end of each year. Each installment will be 10% greater than the preceding installment. The annual effective interest rate on the loan is 9%.
Calculate the amount of principal in the second installment.
- A) 292
- B) 527
- C) 975
- D) 1435
- E) 1774
Answer this question and see the worked solution
Concepts tested
- Geometric Increasing Annuity
- Loan Amortization
- Loans
- Outstanding Balance
- Geometric Progression
- Non-level Annuities