hi can somebody please explain the solution to this question from 2008 paper 1 c. In particular where has the 2.04 come from?
Walter wishes to pay off his loan in equal instalments at the end of the first
and second year. The rate remains at 4% per annum compound interest.
How much would he need to repay, at the end of each year, to clear his
loan after two years? Give your answer correct to the nearest cent.
Let the equal instalment be x
P Year 1 = €5000
P Year 2 = €5000 × 1·04 - x = €5200 -x
P Year 3 = (€5200 -x) × 1·04 = x Final payment
(€5200 - x) x 1·04 = x
€5408 - 1.04x = x
€5408 = 2.04x
x = €5408/ 2.04 = €2650.98
x +1.04x = 2.04x
That's the bit i don't understand.
As the previous poster said:
x + 1.04x = 2.04x
The x on it's own is the same as 1x.
You could also write it this way:
1x +1.04x = 2.04x
thanks, easy when you know.
It's the same with most things in life, anyway good luck with your studies.