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7) Continuous Compounding and Discounting: In continuous compounding, the principal A will grow into V after t years of continuous compounding at the interest rate
7) Continuous Compounding and Discounting: In continuous compounding, the principal A will grow into V after t years of continuous compounding at the interest rate r will grow as follows: V=Aert. Given this, derive the formula for the continuous discounting of V at the nominal discount rate r over t years. We use this formula in economics for the discounting of future income or future utility
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