Reducing balance loans: recurrence models, repayments and time to repay

What this note covers

1. What a reducing balance loan actually is
2. Writing the recurrence relation and reading it correctly
3. Generating the balance sequence and reading an amortisation table
4. Investigating the effect of the interest rate and the repayment
5. Setting up a reducing balance loan on the finance solver
6. Balance after n payments, total interest and the final repayment
7. What Section One can ask when no calculator is allowed
8. How this is examined, and what separates a top answer

8 sections · 12 key terms & formulas · 6 common mistakes