Finance — ISEN 302

• Simple interest is given by $P=I(1+rn)$
• Compound interest is given by $P=I(1+r)^n$
• Nominal interest rates, $r_n$, are related to Effective interest rates, $r_e$, by $r_e=(1+\frac{r_n}{n})^n$, where $n$ is the number of compounding periods per nominal period (so for a nominal rate in terms of $\%/year$ which compounds monthly, $n=12$)