Present Value with Continuous Compounding
This calculator determines the present value (PV) of a future amount (FV) using continuous compounding. It's a powerful tool in finance for understanding the time value of money when interest is compounded infinitely often.
Calculate Present Value Using Continuous Compounding
Continuous Compounding Present Value Formula
Where:
- $$PV$$ – present value
- $$FV$$ – future value
- $$r$$ – annual interest rate (decimal)
- $$t$$ – time in years
- $$e$$ – Euler’s number (~2.71828)
This formula is derived from the limit of compound interest as the number of compounding periods approaches infinity.
Continuous compounding assumes that interest is being added constantly, making it useful for high-frequency financial models, derivatives, and theoretical analysis. This calculator is especially helpful in advanced financial analysis, physics, and economics where exponential decay or growth is relevant. It provides precise discounting when using natural exponential functions.