SOA Exam FM Sample Question 438
Study guide: Exam FM-2
The full price of orthodontic treatment is X. The patient must pay at least a portion of the balance by Day 15 (fifteen days following the beginning of the work). The two payment options are:
- i) Pay the full balance, less a 2.5% discount, on Day 15.
- ii) Pay 250 on Day 15 and the remaining balance, without interest, on Day 60.
Assume a 365-day year.
The implied effective annual yield rate the patient is charged for delaying full payment from Day 15 to Day 60 is 24.2%.
Calculate X.
- A) 697
- B) 875
- C) 1675
- D) 3295
- E) 4827
Answer this question and see the worked solution