Thread: Formula for FVoAD with continuous compounding

I gather that future value of ordinary annuity with continuous compounding of interest is calculated as

FV = PMT [e^rt -1]/[e^r-1]

So to find future value of an annuity due with continuous compounding of interest I would multiply the former by an extra interest factor of e^r thus making the formula as

FV = PMT e^r [e^rt -1]/[e^r-1]

Is this correct, the reason I think this may work is since for discrete compounding of interest we multiply the interest factor of (1+i) to the future value of annuity formula as

FV = PMT (1+i) [(1+i)^n - 1]/i

Just a confirmation of the correctness of the formula will suffice

= continuously compounded rate
= annually compounded rate

if you are still paying your annuities as annually, rather than continuously, then all you need to do is convert your "continuously compounded" interest rate into a normal one and then use the standard formula.

if you note that you will see whether or not you have the right answer.


More often the calculation of interest is the value of annuity paid continuously, which is a different concept to what you described above.