I am in Pre-Calc and we are covering the number e and the function e^x. I do not understand how to compound continuously. Please explain how to do this. Here is my problem: Suppose you invest $1.00 at 6% annual interest. Calculate the amount that you would have after one year if the interest is compounded continuously.

Solution Preview

To understand the concept of continuous compound, let us start from scratch.
rate of interest = r% per annum
Principal = P
Time = t years

Interest is compounded annually:
Amount
A = P*(1+r/100)^t

If interest is compounded half yearly,
A = ...

Solution Summary

Continuously Compounding Interest is investigated. The solution is well explained.

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