Continuously Compounded Interest Formula
The formula for continuously compounded interest is defined as:
S = Pert
where:
S = Final Dollar Value
P = Principal Dollars Invested
r = Annual Interest Rate
t = Term of Investment (in Years)
P = $5,000 (Amount Invested)
r = 4.5% = 0.045 (Annual Interest Rate)
t = 5 (For investment time of five years)
Using continuously compounded interest formula:
S = Pert
S = $5000e(0.045)(5)
S = $5000e(0.225)
S ≈ $6,261.61
S = Final Dollar Value
P = Principal Dollars Invested
r = Annual Interest Rate
t = Term of Investment (in Years)
P = $5,000 (Amount Invested)
r = 4.5% = 0.045 (Annual Interest Rate)
t = 5 (For investment time of five years)
Using continuously compounded interest formula:
S = Pert
S = $5000e(0.045)(5)
S = $5000e(0.225)
S ≈ $6,261.61