A = P e^{rt} is the continuous compounding formula.
Key Concepts
- Concept: Principal amount P
- Concept: Rate r as decimal
- Concept: Time t in years
Steps
- Action: Identify P, r, t
- Action: Compute rt and evaluate e^{rt}
- Action: Compute A = P e^{rt}
Formula
$$A = P e^{rt}$$
Example
Example: If P = 1000, r = 0.05, t = 3, then A = 1000 e^{0.15} ≈ 1161.83.