The Number e and Continuous Compounding Suppose that $1 is invested at 100% interest per year, compounded n times per year. Then the interest rate (in decimal form) is 1.00, and the interest rate per period is 1. According to the formula (with P = 1), the compound amount at the end of 1 yr will be 10" A= 21+ no What happens to this expression as n increases? 10" n 1+ +( (rounded) no 1 N 5 10 100 1000 10,000 1,000,000 Value of e e >> Continuous Compounding If P dollars are deposited at a rate of interest r compounded continuously for t years, then the compound amount A in dollars on deposit is given by the following formula. A= Pe