### The “Mathematical Constant” and Continuously Compouding Interest

Sunday, June 8th, 2008

One of the (many) aspects of the "Mathematical Constant" $$e$$ is that: $$\lim_{x\to\infty} (1+\frac{1}{x})^x = e$$ This property makes $$e$$ very useful for working on compounding interest problems. How so? Let's start with the basic time value of money formula giving the relationship between the PV (present value) and FV (future value) given R (the ...