Activity Overview
First principles approach to loan amortisation as a recursive relationship, and then further use of a program to model the process over the life of a loan.
Objectives
- Introduction of the idea of recursion to model loan amortisations
- The use of a small program to simulate amortization for given parameters of a loan
- Further analysis of amortization via graphical analysis
- Consideration of last payment issue
Vocabulary
- Amortisation
- Final payment
- Recurrence relations
- Interest payments
- Regular premiums
About the Lesson
First principles approach to loan amortisation as a recursive relationship, and then further use of a program to model the process over the life of a loan.