## 3.2 Modelling Reducing Balance Systems with Regular Repayments using Tables

Note: if you cannot remember how to model reducing balance systems with regular repayments, revise notes for 3.1 Modelling Reducing Balance Systems with Regular Repayments.

### Guidelines to using a Table for Reducing Balance Systems

- Tables provide a convenient method for analysing reducing balance systems, especially when there are regular systemic changes (e.g. the interest rate or repayments change regularly).
- The columns of the table should list, the
**compounding period**,**payment**,**interest charged**,**principal addition**(i.e. the amount the system has increased/decreased during each compounding period) and the**balance**at the end of the compounding period. - The
**principal addition**can be calculated by as follows: