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Financial Mathematics Old FM Forum 

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#1




Can someone please help with this problem?
Hi all! Here is the problem:
Jeff obtains a mortgage loan of 55,000 to be repaid with monthly payments at the end of each month over n years. Each monthly payment is 500.38, based on a nominal interest rate of i compounded monthly, i > 0. Jeff is unable to make the first payment but makes all the other payments on time. Still, because he skipped the first payment, he owes 3,077.94 at the end of n years. Calculate i. Why do we need to set the present values equal when we know that the present value is 55,000? In other words, what is the difference between the set up between the 3077.94vj^12n=500.38vj and 55,000 = 500.38 a angle 12n? 
#2




You have two unknowns so you need two equations.

#4




I don't know what you mean by what is the difference. One equation relates to a single payment and the other relates to all of the payments.

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