## Continuous Compounding

The continuous compounding formula is used to determine the interest earned on an account that is constantly compounded, essentially leading to an infinite amount of compounding periods.

The effect of compounding is earning interest on an investment, or at times paying interest on a debt, that is reinvested to earn additional monies that would not have been gained based on the principal balance alone. By earning interest on prior interest, one can earn at an exponential rate.

The continuous compounding formula takes this effect of compounding to the furthest limit. Instead of compounding interest on an monthly, quarterly, or annual basis, continuous compounding will effectively reinvest gains perpetually

## $$p{\xeb}^{\mathrm{rt}}$$

here p=principal,r=rate,t=time

ENTER THE VARIABLES TO BE USED IN THE FORMULA