Problems

I borrow \(C\) pounds at interest rate \(100\alpha \,\%\) per year. The interest is added at the end of each year. Immediately after the interest is added, I make a repayment. The amount I repay at the end of the \(k\)th year is \(R_k\) pounds and the amount I owe at the beginning of \(k\)th year is \(C_k\) pounds (with \(C_1=C\)). Express \(C_{n+1}\) in terms of \(R_k\) (\(k= 1\), \(2\), \(\ldots\), \(n\)), \(\alpha\) and \(C\) and show that, if I pay off the loan in \(N\) years with repayments given by \(R_k= (1+\alpha)^kr\,\), where \(r\) is constant, then \(r=C/N\,\). If instead I pay off the loan in \(N\) years with \(N\) equal repayments of \(R\) pounds, show that \[ \frac R C = \frac{\alpha (1+\alpha)^{N} }{(1+\alpha)^N-1} \;, \] and that \(R/C\approx 27/103\) in the case \(\alpha =1/50\), \(N=4\,\).