Section 11.1: Interest 11.1 Outline A.  Amount of simple interest       1. interest/interest rate       2. principal/present value       3. time       4. simple interest formula B. Future value C. Interest for part of a year       1. exact interest       2. ordinary interest       3. time ordinary interest       4. future value formula (simple interest) D.  Compounding interest       1. compound interest       2. compounding annual       3. other compounding periods       4. future value formula (compound interest)       5. contrast simple and compound interest       6. interest variables E.  Continuous compounding       1. the number e       2. future value formula (continuous compounding) F.  Inflation G. Present value 11.1 Essential Ideas Variables used in this chapter:              A = FUTURE VALUE             This is the principal plus interest.              P = PRESENT VALUE           This is the same as the principal.              r = INTEREST RATE             This is the annual interest rate.              t = TIME                                 This is the time in years.             n = NUMBER OF COMPOUNDING PERIODS EACH YEAR             N = nt                                       This is the number of compounding periods.            i = r/n                                        This is the rate per period Important Formulas            Simple interest formula:                   I = Prt            Future value formula (simple):        A = P(1 + rt)            Future value formula (compound):  A = P(1 + rt)N            Future value formula (simple):       A = Pert For present value solve for P.