Modelling Reducing Balance Loans With Recurrence Relations is a part of the VCE Further Maths topic Recursion and Financial Modelling. It is a part of the subtopic Reducing Balance Loans. In this post, we look at the use of a first-order linear recurrence relation to model and analyse the amortisation of a reducing balance loan. This includes the use of a recurrence relation to determine the value of the loan or investment after repayments.
Recurrence Relations and Reducing Balance Loans
Watch this video to learn how to use the linear recurrence relation to analyse the reducing balance loans.
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