Financial Mathematics → Interest → Simple Interest → Compound Interest → Continuous Interest → Accumulation Factor
In Interest for different compounding periods, we have the formula for accumulated amount
Where is called accumulation factor.
So, an investment for a term h from time t to time t+h has accumulation factor
Where,
is called effective rate of interest per annum, and
is called nominal rate of interest per annum.
If we take the initial time and the final time
, then the formula for accumulation factor has become
So, the formula
can also be written as
because
because
Example 1. Let time be measured in years. Find the accumulation after 12 years of an investment of $1500 made at any time, if the accumulation factor is
Solution:
As we know that the accumulation