IB skill practice

Use recurrence relations in finance

Model balances using recursive interest and contribution rules.

Paper 1, Paper 2 5 marks Difficulty 5

Use recurrence relations in finance - interpretation demand

A regional clinic account starts a month with $2240. Interest of 0.7% is added before a deposit of $205. Use the recurrence \(B_{n+1}=B_n(1+r)+d\) to find the next balance. Enter the requested value and choose the interpretation that matches the result.

Worked practice: result and interpretation

Calculate the requested result first, then choose the interpretation that follows from it.