A = P e^{rt} is the continuous-compounding formula.
Key Concepts
- Concept: Continuous compounding
- Concept: Accumulation factor e^{rt}
- Concept: Principal vs final amount
Steps
- Action: Identify P, r, t values
- Action: Compute exponent rt
- Action: Evaluate A = P e^{rt}
Formula
$$A = P e^{rt}$$
$$I = A – P = Pleft(e^{rt} – 1right)$$