annual compound interest rate equivalent to continuous compound

Question

what annual interest rate compounded annually is equivalent to an annual rate of 6% compounded continuously?

Answer 1

P(1+r)^t = Pe^(0.06t)

 

Divide both sides by P & use Power Rule:

 

(1+r)^t = (e^0.06)^t

 

1+r = e^0.06

 

r = e^0.06 - 1 ≈ 6.183654654536 %

 

Notice the approximately equal symbol "≈"? That means I've used my calculator and the number I get out of it is an approximation no matter how many decimals I use. So I copy all I can get out of the calculator, unless told to round.

Answer 2

THE 2 CATEGORIES ARE THE SAME, AS LONG AS THEY BOTH COMPOUNDED.