Why is this true in this series???

Tarzan and Jane borrow $B to buy a jungle condomium at an interest rate of 9.6% pa, compounded monthly. They borrow the money on 15th September, and on the 14th day of every subsequent month, they pay an instalement of $M. Let An be the amount owing after n months have passed

Explain why A1 = 1.008 x B - M and why A(n-1) = 1.008An - M for n >= 2

Thanks for any help

Quote:

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Originally Posted by nath_quam

Tarzan and Jane borrow $B to buy a jungle condomium at an interest rate of 9.6% pa, compounded monthly. They borrow the money on 15th September, and on the 14th day of every subsequent month, they pay an instalement of $M. Let An be the amount owing after n months have passed

Explain why A1 = 1.008 x B - M and why A(n-1) = 1.008An - M for n >= 2

Thanks for any help

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9.6% pa compounded monthly means a rate of 9.6/12% pm = 0.8% pm.

From there the rest should be simpel enough.

RonL

Thanks i know that but how does that help prove the two statements

Quote:

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Originally Posted by nath_quam

Thanks i know that but how does that help prove the two statements

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If the amount owed at the start of a month is D, then at the end of the
month 0.008D intrest has accrued, and you have paid off M, so you are left
owing:

D'=1.008D-M.

To obtain the given relations just plugin the debt at the start of the
relevany months.

RonL

Quote:

---

Originally Posted by nath_quam

Tarzan and Jane borrow $B to buy a jungle condomium at an interest rate of 9.6% pa, compounded monthly. They borrow the money on 15th September, and on the 14th day of every subsequent month, they pay an instalement of $M. Let An be the amount owing after n months have passed

Explain why A1 = 1.008 x B - M and why A(n-1) = 1.008An - M for n >= 2

Thanks for any help

---

Don't post the same question twice.

RonL