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Continuously Compounded Interest

Formula for Continuously Compounded Interest

To calculate continuously compounded interest use the formula below. In the formula, A represents the amount in the account
formula for how to calculate continuously compounded interest
Continuously Compounded Interest is a great thing when you are earning it! Continuously compounded interest means that your principal is constantly earning interest and the interest keeps earning on the interest earned!


Practice Problems


Problem 1) If you invest $1,000 at an annual interest rate of 5% compounded continuously, calculate the final amount you will have in the account after five years.
Answer


Problem 2) If you invest $500 at an annual interest rate of 10% compounded continuously, calculate the final amount you will have in the account after five years.
Amount of Money


Problem 3) If you invest $2,000 at an annual interest rate of 13% compounded continuously, calculate the final amount you will have in the account after 20 years.
Answer


Problem 4) If you invest $20,000 at an annual interest rate of 1% compounded continuously, calculate the final amount you will have in the account after 20 years.
Answer
Further Reading