Reducing balance loans and repayment schedules

What this note covers

1. Define a reducing-balance model and its assumptions
2. Build the first rows and verify the recurrence
3. Construct a complete schedule and adjust the final payment
4. Calculate total and partial-period interest
5. Compare two repayment amounts using the same model
6. Compare payment frequency without hiding a change in annual cash

6 sections · 10 key terms & formulas · 6 common mistakes