CSE 2111 Lecture 11: Financial functions

• School: Ohio State University
• Department: Computer Science & Engineering
• Course: CSE 2111
• Professor: Diana Kline

Document Summary

De nition: functions that can be used to calculate values based on compounded interest. e. g. taking a loan/ investing in a savings account: calculating simple interest. Simple interest always calculates interest based on the original amount. Simple interest = principal * interest rate per time period * number of time periods e. g. you have invested in a savings account that pays 5% of the principal annually. At the end of each year you will take out the interest paid. Year 1 principal * interest rate . 05 = $ 50. Year 2 principal * interest rate . 05 = $ 50. Year 3 principal * interest rate . 05 = $ 50. Year 4 principal * interest rate . 05 = $ 50. Total 4 year interest: = : compounding periods - savings. When interest earned each period is added to the principal for purposes of computing interest for the next period, this is known as compound interest.