[accountingmajor]

There is an equation on solving the continuous compounding APR.

APR = 1n(1 + EAR)

I don't seem to know what the 1n stands for. I know how to get the EAR and how to get the continuous compounding using this formuls: EAR= eq- 1.

If someone can please help me on what 1n stands for..

THANKS SO MUCH

[morgaine300]

First, do you mean APY? The annual percentage rate is the r. APY is the annual percentage yield, which is a different number when it compounds anything but annually. You "net" higher interest due to the compounding effect. Or, do you have an annual yield and maybe trying to work back into an annual rate? (I've done that with daily compounding, but not continuous compounding.)

I am not familiar with this specific equation. However, there's a couple of issues here. One is the different books can use difficult initials for things. It would help to know what all the initials stand for.

I know of an equation



Note the little e, not big E. That is used for continuous compounding.

These equations can be used for just messing with interest if you call the principal $1 and then subtract 1 from your answer to leave just the interest. I can imagine your equation might be this equation twisted around in some form in order to do that. To solve for exponents you use logs. I think your 1n (which makes little sense in this context) might more likely be an LN. That's a log and would be on any financial calculator.

If you could confirm what all those initials stand for, and if you can check to see if that's an l and not a one, I could probably help you further with this.