Consider a house loan of R200 000, on which interest is charged at the rate of...

 

 

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Consider a house loan of R200 000, on which interest is charged at the rate of 1% per month at the end of the month; and a repayment of R3000 is made at the beginning of each month. Let A, denote the amount of money still owing at the end of month n, with Ao denoting the original loan amount. (a) Write down the difference equation for A, (that is, an expression for A,+1 in terms of A,). (b) Find the equilibrium point of the system. (c) Will the house loan will eventually be paid off or not? Justify your answer! (d) Does the difference equation in (a) change (and if it does, how), if we make each of the following changes: i. Make the initial loan amount 300000. ii. Change the repayment to 1600 per month. iii. Change the interest rate to 2% per month. [30] Consider a house loan of R200 000, on which interest is charged at the rate of 1% per month at the end of the month; and a repayment of R3000 is made at the beginning of each month. Let A, denote the amount of money still owing at the end of month n, with Ao denoting the original loan amount. (a) Write down the difference equation for A, (that is, an expression for A,+1 in terms of A,). (b) Find the equilibrium point of the system. (c) Will the house loan will eventually be paid off or not? Justify your answer! (d) Does the difference equation in (a) change (and if it does, how), if we make each of the following changes: i. Make the initial loan amount 300000. ii. Change the repayment to 1600 per month. iii. Change the interest rate to 2% per month. [30]

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Ansa A1A01 interest A2A11 interest on A1repay of 3000 similarly Ansb using same pr... View the full answer