Contextualization

Theoretical Introduction

Interest is the remuneration charged for the loan of money (or another item) and represents a percentage of the borrowed amount that is added to the total at the end of the loan. In financial mathematics, it is common to differentiate between the concepts of simple interest and compound interest. In the case of simple interest, which is the theme of our project, the interest rate applies only to the principal amount, that is, the original loan amount.

For a better understanding, the formula for calculating simple interest is I = P.r.t, where I is the interest, P is the principal (loan amount), r is the interest rate of the operation, and t is the number of periods. For the calculation of the final amount, we use the formula A = P + I, where A is the final amount. It is essential to understand that the calculation of simple interest is always based on the initial amount, unlike compound interest.

Contextualization and Importance

Financial mathematics, as a whole, is a key piece in various areas of modern life, from personal management to corporate finance. Understanding the concepts of simple interest is extremely important, not only to understand how interest rates work but also to make informed financial choices, such as deciding to take out a loan or investment.

Furthermore, the understanding of simple interest can also be applied in other disciplines, such as physics. For example, the idea of a constant rate of change is fundamental to the study of kinematics.