Delaware Corporation sets up a sinking fund for getting a lump sum. It has borrowed $50,000 for the business at 8% interest. The
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A1 = 4
a2 = 5a1 = 5 x 4 = 20
a3 = 5a2 = 5 x 20 = 100
a4 = 5a3 = 5 x 100 = 500
a5 = 5a4 = 5 x 500 = 2,500
Tn = ar^(n-1); where a = 4, r = 5
Tn = 4(5)^(n-1) = 4/5 (5)^n
Explicit formular is Tn = 4/5 (5)^n
Recursive formular is
a2 = 5a1 = 5 x 4 = 20
a3 = 5a2 = 5 x 20 = 100
a4 = 5a3 = 5 x 100 = 500
a5 = 5a4 = 5 x 500 = 2,500
Tn = ar^(n-1); where a = 4, r = 5
Tn = 4(5)^(n-1) = 4/5 (5)^n
Explicit formular is Tn = 4/5 (5)^n
Recursive formular is