Paper 1 · Financial Maths
⏱ Tested in 1 exam question since 2017
Lesson 7 of 8
Financial Maths 7 – Proof of Amortization formula
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- Prove the amortisation formula A = P·i(1+i)ᵗ/((1+i)ᵗ−1) — a prescribed Paper 1 proof
- Set the loan equal to the sum of the present values of all future repayments
- Sum that geometric series with Sₙ, taking a = A/(1+i) and R = 1/(1+i)
- Simplify the fraction-of-fractions by multiplying by the reciprocal, then isolate A
Most recent exam questions
- 2017 P1 Q8(a)
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