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Financial mathematics is present in everyday life and has several applications in economics. All financial transactions such as: financing, loans, credits, payments, etc., involve this science and are based on the stipulation of interest rates.
Take a loan as an example. This loan is paid in monthly installments plus interest. At the end of it, that is, in discharge, the value will be higher than the initial value of the same. That difference is interest.
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Interest arose from the perception of man, who discovered an affinity between money and time.
The accumulation of capital and currency devaluation gave an idea of interest, as this happened due to the momentary value of money.
Interest was formerly paid for the use of seed and other borrowed goods. In the case of farmers, the payment of a loan was made in the following harvest.
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The method of payment of interest underwent changes to meet the needs of each era. In this way, the time/interest ratio was adjusted.
Currently, the time is pre-established by the parties negotiating a loan.
