Amortization Schedule via Linear Difference Equations

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F20%3A43918275" target="_blank" >RIV/62156489:43110/20:43918275 - isvavai.cz</a>
Result on the web
<a href="https://mme2020.mendelu.cz/wcd/w-rek-mme/mme2020_conference_proceedings_final.pdf" target="_blank" >https://mme2020.mendelu.cz/wcd/w-rek-mme/mme2020_conference_proceedings_final.pdf</a>
DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Amortization Schedule via Linear Difference Equations
Original language description
The main aim of this paper is to show an application of difference equations in the field of finance. We deal with the loan repayment of constant annuities and derive formulas which are used to create an amortization schedule. We focus especially on calculation the amount of interest and the amount reducing the outstanding principle as well as the loan balance in each payment period. All necessary formulas are obtained by solving difference equations, contrary to the practice of financial mathematics where sequence properties are used. It is shown that recursion between two consecutive elements of considered sequences constitutes actually the first order linear difference equation with constant coefficients. As the mentioned formulas used in amortization schedule represent the rules for calculating an arbitrary element of such sequences to find them means to solve the appropriate difference equations which is demonstrated in this contribution.
Czech name
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Czech description
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Project
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Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year
2020
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Mathematical Methods in Economics 2020: Conference Proceedings
ISBN
978-80-7509-734-7
ISSN
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e-ISSN
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Number of pages
5
Pages from-to
511-515
Publisher name
Mendelova univerzita v Brně
Place of publication
Brno
Event location
Brno
Event date
Sep 9, 2020
Type of event by nationality
WRD - Celosvětová akce
UT code for WoS article
000668460800078

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