Formula for continuously compounding interest | Finance & Capital Markets | Khan Academy
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- Опубліковано 20 вер 2024
- Created by Sal Khan.
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Finance and capital markets on Khan Academy: This is an older tutorial (notice the low-res, bad handwriting) about one of the coolest numbers in reality and how it falls out of our innate desire to compound interest continuously.
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everybody stop. he's talking the language of the gods
I know this is really late, but thank you Sal so much for this video. Really helped me out understand this in 8 minutes when I couldn’t in a whole hour.
Thanks, really helpful to understand where the formula comes from rather than just typing it in at the exams :D
Man i have been in trouble understanding this easy notion eventhough i have a bachelor in economics. Grateful for your videos !
Hahaha! I was just watching Futurama's older episodes... 93 cents at 2.25 interest for 1000 years was about 4.28 billion... Searced it and saw all these different arguments for compounding interest.
Khan's tha mannnn!
I don't get how my math book didn't include such a simple helpful equation.
Ikr, same here, if they included this explanation, I wouldn't have been so confused
Sal: Writes seriously confusing expressions
Also Sal: "oh, by the way, these expressions can be written in 4 letters"
watching this and being able to understand it just makes me feel so much love. thank you
Thank you very much. This is the only channel clearly explained how the formula comes from
Thank you so much for sharing the mathematical derivation as well!
You guys: *explain stuff in a very good way*
Me, being dumb: I don’t get it
anyways I love this channel and would be forever stuck without it
khan literally knows everything
Loansharking 101
This is great Sal. Thank you very much - very well explained.
KhanAcademy probably mentions this in another video.
However, for a quick way to get doubling time (useful for checking results).
Doubling time = 72 divided by rate of increase. (plz note, it introduces some inaccuracy)
ie, 6% interest per year = 72/6 = 12 = doubling time of 12 years.
ie, the initial quantity will double in 12 years with a 6% rate of increase.
This shortcut might be good as a the subject of a video.. ie, why is it that 72 works like this?
I get it intuitively, imagining a function curve, but have never seen it explored/described properly.
Very simple when laid out like this, thank you!
Great video, and explanation.
So we can use either formulas right? The one we started with in the beginning and the one we derived by the end?
Wow you made me wait 8 minutes and 40 seconds to tell me compound interest =Pe^(rt)
True, but he explained how it works. I mean, you really can just do a Google search if you really want to know, but you can’t fully get it just by that. Here it instead shows how the equation is made and why it works out, a lot more important in my opinion.
Thanks a lot!
how do you make this an exponential function so that I can graph it?
But if 0.05 is the annual compounded rate, isn't the continuously compounded rate = ln(1+0.05) and not 0.05?
Is this on the app?? I don't see it!
imma put this formula as my wi-fi password
How do you input this into a financial calculator comment section?
7:48 "all of that is equal to E"
yes, guys, even Sal Khan agrees that whatever happens, everything comes back to the E
(you know what time it is...)It's meme review time
Thank you!
@MathMars Using the formula A=Pe^rt for continuously compounding interest, when you solve to see how long it takes P to double, you always end up with ln(2) divided by the interest rate. ln(2)=.693, so ln(2)/.06 is approximately equal to 72/6
I think you forgot to add 1
50(1+0.10)^3 =66.55
sir, which platform/software is used for demonstration; its very attractive!!
Infinity is magical
I need an answer now. How do you do this problem? What interest rate is required for an investment subject to continuous compounding to double in 10 years? I am so confused because this problem only has T=10years.
***** It's correct, I figured it out a while ago though, thanks.
it very interesting working it
is this the same thing as in engineering economics?
How can you know so much!
I mean, whatever I need to know I search for it in Khan Academy and you are almost always the tutor
@4:32 the whole goal is fuckin to get ... lol
He is too smart
wow. i got the aha moment
Thanks sir
skip to 8:00 for what actually matters
ecksdee Thank you
I like how used up the calculator looks
Nice...
the fun starts when the interest rate depends on time :p
oh no. we don't do that here
Escoreal, Jobert L.
does anyone know how to work out 't', if a question does not state a number for it?
I had the same question. I am trying to figure out what "t" is.
HELP ME!!! PLEASE!!!!! MY BRAAAAIIIN!!!!
t is the number of years.
u can figure it out by using logarithm.t will be:
[ln(FV/PV)]/r
Subscribed.
I do that aprox on the top of my head. Maybe that explains the hair loss.
I don’t get it!
Inter arresting
What a vid
*E*
#Khan2016
That made no sense to me.
Cause you're stupid
you are funny
My brain :(
RIP
Stop at 4:30, after that its nonsense
That's literally the where the point of the video is lol
idk, i understood it...
Stutter Stutter