Uploaded October 2024 | Updated September 2026, 2 weeks ago
Exponential functions were first explored by the Swiss mathematician Jacob Bernoulli in sixteen-eighty-three, as a way of computing "continuous compound interest". When computing accruing interest and principal with continuous compounding, the compounding periods can be thought of as being infinitely short, with the increase in principal approaching the theoretical upper limit. In Bernoulli's quest to determine this upper limit, his research led to the development of the exponential function whose base is the constant "e", also known as "Euler's number". In this lecture, we use algebra to calculate compound interest with increasing shorter compounding periods, and show how this upper limit is approached.
Exponential functions were first explored by the Swiss mathematician Jacob Bernoulli in sixteen-eighty-three, as a way of computing "continuous compound interest". When computing accruing interest and principal with continuous compounding, the compounding periods can be thought of as being infinitely short, with the increase in principal approaching the theoretical upper limit. In Bernoulli's quest to determine this upper limit, his research led to the development of the exponential function whose base is the constant "e", also known as "Euler's number". In this lecture, we use algebra to calculate compound interest with increasing shorter compounding periods, and show how this upper limit is approached.
