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September 18, 2014

September 18, 2014

Posted by **recurrence relation question** on Sunday, December 6, 2009 at 12:14pm.

a) the amount that he owes at the start of each month is taken to be the amount still owing just after the monthly repayment has been made.

So, let Un and Un+1 represent the amounts that he owes at the start of two successive months. write down a recurrence relation involving Un+1 and Un.

B) find the date and the amount of the final payment.

- mathmatics -
**Reiny**, Sunday, December 6, 2009 at 12:30pmlooks like they want you to do it step by step, what a bother.

Here is the actuarial mathematical way of doing it.

2500 = 300[1 - 1.015^-n]/.015

.

.

1.015^-n = .875

using logs

n = 8.9

So he needs 8 full payments of £300

outstanding balance just after making the 8th payment

= 2500(1.015)^8 - 300(1.015^8 - 1)/.015

=

= 286.38

(notice the 8.9 indicated we were very close to another payment of 300)

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