My Math Forum % payment loan

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 September 9th, 2012, 07:29 PM #1 Math Team   Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,585 Thanks: 1038 % payment loan As example, a \$1,000.00 loan is repaid with monthly payments being 3% of balance owing; with interest at 1% per month, this is what the loan looks like after 2 payments: Code: N PAYMENT INTEREST BALANCE 0 1000.00 1 30.00 10.00 980.00 2 29.40 9.80 960.40 a = amount borrowed i = monthly interest rate (.01 in above) m = minimum pay't rate (.03 in above) n = number of payments made Gimme a formula that gives balance owing after n payments. In terms of a,i,m,n , of course.
 July 8th, 2016, 05:22 PM #2 Math Team   Joined: Jan 2015 From: Alabama Posts: 3,264 Thanks: 902 If 3% of the balance is paid and interest of 1% accrues every month, then the balance decreases by 2% every month. If, at some point, the balance is "A" then the next month, it will be A- 0.02A= (0.98 )A. Thus, after t months, the balance will be (0.98 )^n(1000). The general formula would be a(m-i)^n.

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