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HOSTING A TOTAL OF 318 FORMULAS WITH CALCULATORS

Present Value Continuous Compounding

The present value with continuous compounding formula is used to calculate the current value of a future amount that has earned at a continuously compounded rate. There are 3 concepts to consider in the present value with continuous compounding formula: time value of money, present value, and continuous compounding.

Time value of money is the idea that a specific amount today is worth more than the same.

The basic premise of present value is the time value of money

Continuous Compounding is essentially compounding that is constant. Ordinary compounding will have a compound basis such as monthly, quarterly, semi-annually, and so forth. However, continuous compounding is nonstop, effectively having an infinite amount of compounding for a given time.

c rt

Here,c=cash flow,r=rate,t=time

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