Question
Q: A student loan of amount $10,000 is amortized over 20 years by continuous payment at 8%. The loan is subject to default at constant
Q: A student loan of amount $10,000 is amortized over 20 years by continuous payment at 8%. The loan is subject to default at constant force of default of 1%.
A government agency guarantees the outstanding balance of the loan in case of default. Using force of interest of 5%, calculate the APV of the guarantee.
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Introduction to Real Analysis
Authors: Robert G. Bartle, Donald R. Sherbert
4th edition
471433314, 978-1118135853, 1118135857, 978-1118135860, 1118135865, 978-0471433316
