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P1 CIE question geometric sequences

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tmisterr:
A person wants to borro $100000 to buy a house. He intends to pay back a fixed sum of $C at the end of each year so that after 25 years he has completely paid off the debt. Assuming a steady interest rate of 4% per year expalin why:


100000=C(1/1.04+1/1.042+1/1.043+......1+1.0425

Calculate the value of C

astarmathsandphysics:
4 hours

astarmathsandphysics:
100000=C(1/1.04+1/1.042+1/1.043+......1+1.04^25)
100000=C(a(1-r^n)/1-r))
100000=C(1(1-1/1.04^25)(1-1/1.04)=C*16.62
C=1662000

tmisterr:
can you start from th beginning, the first part, findng C is not the problem, proving the formular is

astarmathsandphysics:
Ok. I will do it when Iget home

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