What is Future Value of Annuity with Continuous Compounding?
The future value (FV) of an annuity with continuous compounding is a concept in finance that helps determine the total worth of a series of regular payments made at equal intervals and compounded continuously over a specific period at a given interest rate. Unlike traditional compounding, which compounds interest at discrete intervals (such as annually, quarterly, or monthly), continuous compounding assumes that interest is added to the principal balance infinitely often, resulting in a higher overall value over time.This concept is particularly relevant in investment scenarios where interest is compounded continuously, such as in certain types of bonds or investment products that offer continuous growth potential.
How to Calculate Future Value of Annuity with Continuous Compounding?
Future Value of Annuity with Continuous Compounding calculator uses FV of Annuity with Continuous Compounding = Cashflow per Period*((e^(Rate per Period*Number of Periods)-1)/(e^(Rate per Period)-1)) to calculate the FV of Annuity with Continuous Compounding, The Future Value of Annuity with Continuous Compounding represents the total value of regular payments compounded continuously over a specific period at a given interest rate. FV of Annuity with Continuous Compounding is denoted by FV_{ACC} symbol.
How to calculate Future Value of Annuity with Continuous Compounding using this online calculator? To use this online calculator for Future Value of Annuity with Continuous Compounding, enter Cashflow per Period (C_{f}), Rate per Period (r) & Number of Periods (n_{Periods}) and hit the calculate button. Here is how the Future Value of Annuity with Continuous Compounding calculation can be explained with given input values -> 3076.907 = 1500*((e^(0.05*2)-1)/(e^(0.05)-1)).