Loan Calculations and Refinancing

Free SOA Exam FM (Financial Mathematics) lesson in Loans. 20 min read, ~3,065 words.

Loan equation:. Given any three of, solve for the fourth. Solving for uses logarithms; a non-integer means the final payment is a drop or balloon. Prospective method gives the PV of remaining payments; retrospective accumulates the payment history. Refinancing: compute first (the new principal), then. Total interest over a block...