Analysing and Modelling Reducing Balance Loans and Annuities (VCE SSCE General Mathematics): Flashcards

Loan with regular payments to reduce balance over time

Investment earning interest with regular withdrawals

$V_{n+1} = RV_n - D$

Balance/value after $n$ payments

Regular payment amount

Growth multiplier

$R = 1 + \frac{r}{100 \times p}$

Number of compounding periods per year

$p = 12$

Loans: owe money; Annuities: invested money