A = P e^{rt}, where P is principal, r is rate, t is time.
Key Concepts
- Concept: Continuous compounding growth model
- Concept: Principal P
- Concept: Final amount A = P e^{rt}
Steps
- Action: Identify P, r, t
- Action: Compute e^{rt} (exponential factor)
- Action: Multiply by P to get A
Formula
$$A = P e^{rt}$$
Example
Example: P = 1000, r = 0.05, t = 5. Then A = 1000 e^{0.25} ≈ 1284.03.