compounded continously

• September 12th 2007, 01:53 PM
jenzbears
compounded continously
achieve a million dollars in 30 years at 6% interest compounded continously
:confused:
• September 12th 2007, 02:00 PM
Jhevon
Quote:

Originally Posted by jenzbears
achieve a million dollars in 30 years at 6% interest compounded continously
:confused:

the formula for continuous compounding is the same as that for bacterial growth.

$P(t) = P_0 e^{rt}$

where $P(t)$ is the amount at time t, $P_0$ is the initial amount, $r$ is the rate of interest, and $t$ is the time.

you want to solve $1000000 = P_0e^{0.06(30)}$ for $P_0$

the formula is usually written as $A = Pe^{rt}$ though. A is for amount, P is for principle