Theory of Interest

The Chapter “Theory of interest” is devoted to study of the theory of interest and considers the cases of simple interest, compound interest, multiple interest accrual, as well as continuous accrual of interest. “Rule 70” and “Rule 100” along with increase of capital by an arbitrary number of times are considered. Effective discount rate and effective interest rate are studied. As well the following questions are investigated: equivalence of different interest rates, the impact of inflation on the interest rate, inflation rate for several periods, currency conversion etc.