- Total Interest Earned:
- Final Amount:
- What does Continuous Compounding mean?
- Continuous Compounding of interest means the principal is constantly earning interest. It occurs when interest is charged against the principal and compounds continuously.
Continuous Compounding = P * e^rt
- P - The original balance or Principal
- r - Rate of interest
- t - Time period
Suppose an account has a balance of $1000 and the rate is 10% p.a. To calculate the ending balance after a span of 2 years;
It can be shown as $1000 times e(.2) and will return a balance of $1221.40 after the two years.
- May 22, 2018
- Tool Launched