SOA Exam FM Sample Question 422

Study guide: Exam FM-2

A home buyer borrows 225,000 and has two options to repay the loan, both at an annual nominal interest rate of i, convertible monthly:

• Option 1: Level payments of 1960 at the end of each month for 180 months.
• Option 2: Level payments of X at the beginning of each month for 360 months.

Calculate X.

• A) 1415
• B) 1418
• C) 1422
• D) 1427
• E) 1435

Answer this question and see the worked solution

Concepts tested

• Loan Repayment Comparison
• Loan Amortization
• Nominal Interest Rate
• Annuity Due
• Payment Amount

More questions from this set

• SOA Exam FM Sample Question 421
• SOA Exam FM Sample Question 423