Paying off a Loan (HSC SSCE Mathematics Advanced): Quizzes

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Paying off a Loan
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What mathematical theory is used to calculate loan repayments?

Geometric progression (GP)

What is the core formula for amount AnA_n still owing after nn periods?

(principal + interest) - (instalments + int)

When is the first payment typically made after taking out a loan?

One time period after

What is the GP sum formula SnS_n used in loan calculations?

a(rn−1)r−1\frac{a(r^n - 1)}{r - 1}

If annual interest is 12% compounded monthly, what is the monthly rate?

1%

What must instalments exceed to reduce the loan principal?

The initial interest charge

To find how long it takes to repay a loan, what must you do?

Set An=0A_n = 0 and solve for nn using logs

What is the recursive formula for loan balance from period nn to n+1n+1?

An+1=An(1+R)−MA_{n+1} = A_n(1 + R) - M

What does An=0A_n = 0 represent in loan calculations?

The loan is fully paid off

Why would 1900 USD monthly payments fail on a 200000 USD loan at 1% monthly interest?

Initial interest is 2000 USD, exceeds payment

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