# Continuous Compounding

Continuous compounding is the procedure of obtaining interest on top of interest in a monthly, quarterly and semiannual basis. It is utilized to discover the future value of a present sum when investment is exacerbated persistently.

### Calculator from Continuous Compounding

**Formula from Continuous Compounding**

** FV = PV x e ^{rt} **

**Where,**

**FV**= Future value**PV**= Present value**r**= Interest rate**t**= Number of years

### Example from Continuous Compounding

An amount of $5000.00 is deposited in a bank paying an annual interest rate of 5%, compounded continuously. Find the future value after 3 years.

**Given,**

PV = 5000 r = 5% = 0.05 t = 3

**To Find,**

Future value

**Solution:**

Substitute the given values in the formula, FV = PV x e^{rt} = 5000 x e^{0.05 x 3} = 5000 x e^{0.15} = 5000 x 1.161834 = 5809.17

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