A bank agrees to lend 1300 now and X two years from now in exchange for...

Transcribed Image Text:

A bank agrees to lend 1300 now and X two years from now in exchange for a single repayment of 10,000 at the end of 7 years. The bank charges interest at an annual effective rate of 18.55% for the first 5 years and at a force of interest Calculate X. +5 . for t≥ 5. A bank agrees to lend 1300 now and X two years from now in exchange for a single repayment of 10,000 at the end of 7 years. The bank charges interest at an annual effective rate of 18.55% for the first 5 years and at a force of interest Calculate X. +5 . for t≥ 5.

Answer rating: 100% (QA)

SOLUTION We can use the present value of the loan and the single repayment to solve for X Let P be t... View the full answer