What is the process for calculating instantaneous compound interest?

Answer by  Clement (1453)

The instantaneous compound interest was studied already by Newton, who proposed a geometrical model. To calculate the instantaneous compound interest use e^j - 1, where e = 2. 71828182... and j is the nominal rate. The actual difference between the instantaneous compound interest and the simple interest is usually not so big.

Answer by  VB (361)

There is a relationship between the annual interest rate (r) and the instantaneous interest rate (R). Use 1 + r = e^R. So given the annual interest rate, to solve for R: R = ln (1 + r)