How Do You Calculate Compound Interest Continuously?
If your bank or savings institution offers an account with compound interest that is calculated continuously, it means that your money is earning interest all the time. In contrast, most traditional savings accounts only compound interest every month or year. To calculate continuous compound interest, you use the formula A=Pe^rt. Write down the numbers you will need to calculate continuous compound interest. P is the principal amount of money you begin investing with. R is the annual interest rate of your account. T is the number of years you want to calculate interest for. Multiply the annual interest rate by the number of years you want to calculate interest for (R x T). For example, if your account has a 5 percent interest rate and you plan to save your money for three years, you would multiply .05 by 3 to get .15. Calculate e (the base of the natural log) to the power of the result from Step 2. For example, if your result from Step 2 was .15, then you would calculate e to the .15 p
