Question: In lecture, Professor Gruber explained discrete compounding interest. Interest can also be compounded continuously. Here we explain the difference. Professor Gruber calculated future value as

In lecture, Professor Gruber explained discrete compounding interest. Interest can also be compounded continuously. Here we explain the difference. Professor Gruber calculated future value as FV = P(1 + r)'. where P is the principal. r is the interest rate. and t is the term of the contract (often in years). This formula can be generalized to FV = P(1 + r/m)\

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