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how to do compound interest continuously. Consider the following example. The calculation assumes constant compounding over an infinite number of time periods.
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The concept of compounding interest is pretty simple really its simply earning interest on your principal investment but then continuing to earn interest on top of that principal and the previous interest that youve already earned. The trick to using a spreadsheet for compound interest is using compounding periods instead of simply thinking in years. Gather variables the compound interest formula.
For monthly compounding the periodic interest rate is simply the annual rate divided by 12 because there are 12 months or periods during the year.
Now they pay you 50 interest per half-year. Some bonds earn compound interest Many bonds pay fixed interest sums but some such as zero coupon bonds incorporate compounded growth. Continuous Compound Interest Calculator Directions. When interest is declared to be principal this process is known as continuous compounding.
