INTEREST: CONTINUOUS COMPOUNDING.

Two variableswe have introduced are:

r = Nominal interest rate per interest period
m =Number of compounding subperiodsper time period

Since the interest period is normally one year, the definitions become:

r = Nominal interest rate per year
m =Number of compounding subperiodsper year

r/m  = Interest rate per interest period m
m n = Number of compounding subperiods in n years

⇒ Single Payment Interest Factors: Continuous Compounding.

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