This video is the second in the series for the Year 12 General Maths (Units 3 and 4 course) relating to financial mathematics. Another really long title means that I am going to look at annuities and reducing balance loans. For the algorithm the title is: Using recurrence relations to analyse and model reducing balance loans and annuities. I look at what an annuity is as well as a reducing balance loan. Understand the context of the question goes a long way to understanding how to solve the problem. I recap the formula (once again) and then use a lot of worked examples and five VCAA questions to show how the theory is translated into examinable questions. All theory is explained in an easy to understand way.