Mathematical Annuitty Models Application in Cash Flow Analysis
Authors
Galadima D. J.
School of Science Technology, Federal College of Chemical and Leather Technology, Zaria
Choji D. N.
Department of Mathematics, University of Jos
Okon U. E.
School of Science Technology, Federal College of Chemical and Leather Technology, Zaria
Abstract
Many problems arising in the mathematics of finance involve identical money flows at regular time intervals and are solved by appropriate valuation at a focal date or by setting up an equation of value. This paper shows how such problems can be viewed as special cases of a certain class of first-order difference equations. To illustrate the annuity models, we draw tables to compare the reinvestment of benefit from a fixed deposit and the usual simple interest method. We also compare the cost efficiency between Amortisation and Sinking fund loan repayment as prevalent in financial institutions.
