# What is continuous interest rate?

In the formula, A represents the final amount in the account that starts with an initial (principal) P using interest rate r for t years . Continuously compounded interest means that your principal is constantly earning interest and the interest keeps earning on the interest earned!Click to see full answer. Also, what is the difference between compound interest and continuous interest?Discretely compounded interest is calculated and added to the principal at specific intervals (e.g., annually, monthly, or weekly). Continuous compounding uses a natural log-based formula to calculate and add back accrued interest at the smallest possible intervals. For example, simple interest is discrete.Also, is continuous compounding better? One of the benefits of continuous compounding is that the interest is reinvested into the account over an infinite number of periods. It means that investors enjoy the continuous growth of their portfolios, as compared to when they earn interest monthly, quarterly, or annually with regular compounding. Similarly, you may ask, does compounded continuously mean daily? Today it’s possible to compound interest monthly, daily, and in the limiting case, continuously, meaning that your balance grows by a small amount every instant.What is the math formula for compound interest?The compound interest formula is ((P*(1+i)^n) – P), where P is the principal, i is the annual interest rate, and n is the number of periods.