

FlashChat  Actuarial Discussion  Preliminary Exams  CAS/SOA Exams  Cyberchat  Around the World  Suggestions 
Financial Mathematics Old FM Forum 

Thread Tools  Search this Thread  Display Modes 
#1




Tia question
Jan takes out 2 loans:
One for 25,000 at a 6% annual effective interest rate One for 75000 at a 9% annual effective interest rate Jan makes annual payments of 14,000 beginning one year after she takes out the loans. She pays only interest on the 25,000 loan until the 75,0000 loan is paid off. Determine the total outstanding balance on both loans immediately after the 10th payment. I’m the TIA they have it so 140001500 for payment for 75,000. I feel like they are making up random stuff it’s not making any sense. Why is the answer 12,640.65? How do they magically come up with that? 
#2




Hints: you need n full payments of $12,500 to pay off the $75,000 loan and a small drop payment. The $25,000 will still be due at time n. There will be a small drop payment at time n+1.
__________________
"I'm tryin' to think, but nuthin' happens!" 
#3




For the first several years, they are paying the interest on the 25,000 loan (1500) and the balance of the 14000 (12500) is paid toward the 75,000 loan.
Note that the unpaid balance on the 25,000 loan remains at 25,000 since interest is being paid but nothing toward principal. a. So how much of the 75,000 loan is unpaid at the end of 9 years? b. How much is needed to finish paying off the rest of the 75,000 loan in year 10. (call that X). c. That means they pay 14000X on the 25,000 loan. So how much is unpaid after that payment at the end of year 10. Ans 12,640.65 Sort of ninja'd by Breadmaker 
#4




Quote:

Thread Tools  Search this Thread 
Display Modes  

