Amortization Schedule via Linear Difference Equations

Kód výsledku v 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>

Výsledek na webu

<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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Jazyk výsledku

angličtina

Název v původním jazyce

Amortization Schedule via Linear Difference Equations

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

Amortization Schedule via Linear Difference Equations

Popis výsledku anglicky

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.

Druh

D - Stať ve sborníku

CEP obor

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OECD FORD obor

50206 - Finance

Projekt

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Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2020

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název statě ve sborníku

Mathematical Methods in Economics 2020: Conference Proceedings

ISBN

978-80-7509-734-7

ISSN

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e-ISSN

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Počet stran výsledku

5

Strana od-do

511-515

Název nakladatele

Mendelova univerzita v Brně

Místo vydání

Brno

Místo konání akce

Brno

Datum konání akce

9. 9. 2020

Typ akce podle státní příslušnosti

WRD - Celosvětová akce

Kód UT WoS článku

000668460800078