<Dl> <Dd> B k = B 0 (1 − r k r n) = B 0 (1 − λ k λ n) (\ displaystyle B_ (k) = B_ (0) \ left (1 - (\ frac (r_ (k)) (r_ (n))) \ right) = B_ (0) \ left (1 - (\ frac (\ lambda _ (k)) (\ lambda _ (n))) \ right)) </Dd> </Dl> <Dd> B k = B 0 (1 − r k r n) = B 0 (1 − λ k λ n) (\ displaystyle B_ (k) = B_ (0) \ left (1 - (\ frac (r_ (k)) (r_ (n))) \ right) = B_ (0) \ left (1 - (\ frac (\ lambda _ (k)) (\ lambda _ (n))) \ right)) </Dd> <P> This is the easiest way of estimating the balances if the λ are known . Substituting into the first formula for B above and solving for λ we get, </P> <Dl> <Dd> λ k + 1 = 1 + (1 + r) λ k (\ displaystyle \ lambda _ (k + 1) = 1 + (1 + r) \ lambda _ (k)) </Dd> </Dl>

Explain the various views on the term interest