Actuarial Outpost ADAPT solution is weird
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#1
07-23-2012, 12:16 AM
 Kaner3339 Member SOA Join Date: Jun 2011 Location: Canada Studying for MLC & MFE Posts: 1,087

A loan of 60,000 is repaid over ten years with semiannual payments at a nominal interest rate of 6% compounded semiannually. The first payment is \$3,000 and is paid 6 months from the date of loan. For the first five years, each subsequent payment will be \$300 more than the previous payment. After the 10th payment, each succeeding semiannual payment will be reduced by X until the loan is completely paid. Calculate X.

I thought 60000 = 3000*a[10] + v300(Ia)[9] + (v^10)(5700a[10] - X(Ia)[10])

The ADAPT solution is 60000 = 3000*a[10] + 300(Ia)[10] + (v^10)(5700a[10] - X(Ia)[10]).

All at 3%.

Wouldn't their solution mean a payment of 3300 at t = 1?
#2
07-23-2012, 08:38 AM
 Gandalf Site Supporter Site Supporter SOA Join Date: Nov 2001 Location: Middle Earth Posts: 26,562

Your formula looks right. Do they claim the answer is 379.53 or something else?
#3
07-23-2012, 01:36 PM
 Kaner3339 Member SOA Join Date: Jun 2011 Location: Canada Studying for MLC & MFE Posts: 1,087

I didn't plug the numbers so I'm not sure. I submitted feedback though and they fixed it. It's all good now.
#4
07-24-2012, 02:07 PM
 Jason Lai SOA Join Date: Jun 2012 Posts: 7

The solution is updated
Attached Images

#5
07-24-2012, 04:55 PM
 Kaner3339 Member SOA Join Date: Jun 2011 Location: Canada Studying for MLC & MFE Posts: 1,087

Quote:
 Originally Posted by Jason Lai The solution is updated
yea cuz I msged them about it

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