Convert the loan repayment model into a continuous time model: consider a loan in the amount...

 

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Convert the loan repayment model into a continuous time model: consider a loan in the amount of Po. An amount of x is paid every year in n equal payments equally spaced out in a year. The annual interest rate is r, compounded n times a year at the time of each payment. (a) Let n, derive an ordinary equation model for the payment. (b) Solve the equation, and find a formula for x so that the loan can be paid off in T years. Convert the loan repayment model into a continuous time model: consider a loan in the amount of Po. An amount of x is paid every year in n equal payments equally spaced out in a year. The annual interest rate is r, compounded n times a year at the time of each payment. (a) Let n, derive an ordinary equation model for the payment. (b) Solve the equation, and find a formula for x so that the loan can be paid off in T years.

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