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Math Help - Why is this true in this series???

  1. #1
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    Exclamation 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
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  2. #2
    Grand Panjandrum
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    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
    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
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  3. #3
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    Thanks i know that but how does that help prove the two statements
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  4. #4
    Grand Panjandrum
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    Quote Originally Posted by nath_quam
    Thanks i know that but how does that help prove the two statements
    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
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  5. #5
    Grand Panjandrum
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    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
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