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In finance, interest is the price paid by a borrower for the use of a lender's money. In other words, interest is the amount of paid to "rent" money for a period of time. The original amount lent is called the principal, and the percentage of the principal which must be paid annually as interest is called the interest rate. Interest rates are crucial indicators in financial markets.
The existence of interest
There are a variety of reasons which explain the why lenders charge interest for the use of their money:
- The time value of money: Most people would choose to have money in the present rather than money in the future. When asked to lend their current money in exchange for a promise to repay that money in the future, most lenders will agree only if they are repaid more than they originally lent. In effect, the interest rate is the payment for the use of money over time.
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Alan Frisch - Artificial Intelligence, constraint satisfaction problems
Hector Levesque - Local search, random SAT, artificial intelligence
John Franco - (probabilistic analysis of algorithms, polynomial time solvable subclasses of satisfiability)
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