my question is about 3.2.13 which is
A loan of amount L is to be repaid by n payments, starting oneperiod after the loan is made, with interest at rate I per period.Two repayment schemes are considered:
i) level payments for the lifetime of the loan;
ii) each payment consists of principal repaid of L/n plusinterest on the previous outstanding balance.
Find the total interest repaid under each scheme and showalgebraically that the interest paid under scheme (i) is largerthan that paid under scheme (ii).
Show that for each t = 1, 2, . . . , n − 1, OBt is larger underscheme (i) than under scheme (ii).
Verify algebraically that L is the present value at the time ofthe loan, at rate of interest i per payment period, of all paymentsmade under scheme (ii).
