A = P e^{δ t}, where δ is the force of interest.
Key Concepts
- Concept: Force of interest
- Concept: Continuous compounding
- Concept: Effective vs. nominal rates
Steps
- Action: Identify P, δ, t
- Action: Compute A = P e^{δ t}
- Action: Compute I = A − P and i_eff = e^{δ} − 1
Formula
$$A = P , e^{delta t}$$
Example: If P = 1,000, δ = 0.05, t = 3, then A ≈ 1,000 e^{0.15} ≈ 1,161.83.