GENERALIZED FORMULA FOR THE PERIODIC GEOMETRIC-GRADIENT SERIES PAYMENT IN A SKIP PAYMENT LOAN WITH ARBITRARY SKIPS

ABSTRACT

Recently, Formato derived a useful formula of the amount of periodic equal payment in a skip payment loan with arbitrary skips using a second-order finite difference equation. We rederive his formula using simple arithmetics and provide an intuitive explanation of the formula. We also extend his result to the case that periodic payments occur in a geometric-gradient-series.

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ILKYEONG MOON

ILKYEONO MOON is an Assistant Professor of Industrial Engineering at Pusan National University in Korea. He earned his Ph.D. in Operations Research from Columbia University in 1991. His interests are in the areas of Production Management, Manufacturing Systems Analysis, and Production Economics. He has research papers published or forthcoming in journals such as International Journal of Production Research, Journal of the Operational Research Society, Management Science, Omega, Operations Research, and The Engineering Economist.