kooltrainer
New Member
- Joined
- Jun 17, 2006
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- HSC
- 2008
A loan of $P at an interest rate of R per month is repaid over n monthly instalments of $M
a) show that M - (M+P)K^n + P K^(n+1) = 0 where K = 1+R
b) Suppose that i can afford to repay $650 per month on a $20000 loan to be paid back over 3 years. Use these figures in the equation above and apply Newton's method in order to find the highest rate of interest i can afford to meet. Give answers correct to 3 sig figures.
ans = 0.008 per month or 10.5% per annum
i just need help with (b)
a) show that M - (M+P)K^n + P K^(n+1) = 0 where K = 1+R
b) Suppose that i can afford to repay $650 per month on a $20000 loan to be paid back over 3 years. Use these figures in the equation above and apply Newton's method in order to find the highest rate of interest i can afford to meet. Give answers correct to 3 sig figures.
ans = 0.008 per month or 10.5% per annum
i just need help with (b)