Continuous versus Compounded Interest

rate r

0.1

periods n

1

number years y

1

Over 1 year, $100 at 10.% yields $110.52 if continuously

19

10

compounded and $110.00 if compounded 1 time.

19

10

This Demonstration compares continuously compounded interest to compounded interest. As the number of periods increases, the compounded interest graph looks more and more like the graph of the continuously compounded interest.