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Last updated on 17 September 2025
Euler’s number, written as 𝑒, is a mathematical constant introduced by Jacob Bernoulli in 1683. Later, Leonhard Euler studied it further, which is why it is named after him.
e here represents Euler’s number, and it is defined by the following equation:
Euler’s formula for compound interest,
A = Pert
Where
FV = Future value
PV = Present value of balance or sum
e = mathematical constant
r = Interest rate being compounded
t = Time in years
The value of e is approximately 2.718. Euler's number is mostly used to calculate the rate of change or growth, such as in finance, radioactive decay, and so on. Here are some examples
Example 1: Calculate the final amount when $100 is invested for 5 years at a 4% interest rate compounded continuously.
Solution: Euler's formula for compounding interest is
A = Pert
Given, P = 100
r = 0.04
t = 5
A = 100e0.04 × 5
= 100 × 1.2214
= 122.14
Therefore, the money in the account after 5 years is $122.14.
Example 2: Find the value of e when n = 3
Solution: Given n = 3,
\(\lim\limits_{x \to \infty} ( 1 + \frac1n)^n\)
e = \((1 + \frac13)^3\) = 2.37037
This is an approximation; Euler's number e ≈ 2.71828.
1. Biology: It is used to calculate the exponential growth and decay of organisms
2. Physics: Radioactive decay follows an exponential pattern modeled using Euler’s number.
3. Finance: Compound interest calculations in finance reveal growth and decline patterns, which support better risk management
4. Computer Science: It helps study complex algorithms in fields such as machine learning, computer graphics, optimization, and many more.
5. Weather: Euler’s number is used in studying weather changes, such as temperature changes over time, which involves exponential functions.
Calculate the final amount when $1000 is invested for 4 years at a 6% interest rate compounded continuously.
A = 1271.24
Using the formula A = Pert
A = Total money with interest
P = 1000
r = 0.06
t = 4
A = 1000 e0.06 × 4
A = 1000 e0.24
A = 1000 × 1.271249
A = 1271.24
Find the value of e when n = 5
2.48832
Given n = 5,
\(\lim\limits_{x \to \infty} ( 1 + \frac1n)^n\)
\((1 + \frac15)^5\) = 2.48832
Evaluate lim(n→∞) (1+3/n)^n
20.0855
We know that,
\(\lim\limits_{x \to \infty} ( 1 + \frac1n)^n\) = e,
Given \((1 + \frac3n)^n\), which is equivalent to,
\((1 + \frac3n)^n\) = \(1 + \frac1 {n/3}^{n/3 \times 3}\)= \(1 + \frac1 {n/3}^{n/3 }\)
The limit approaches,
\(\lim\limits_{x \to \infty} ( 1 + \frac3n)^n\) = e3
We know e = 2.71828, then, e3 = 2.718283 = 20.0855
Therefore, (1+3n)n = 20.08553
Calculate the final amount when $800 is invested for 9 years at a 6% interest rate compounded continuously.
1372.80
Using the formula A = Pert
A = Total money with interest
P = 800
r = 0.06
t = 9
A = 800 × e0.06 × 9
A = 800 × e0.54
A = 800 × 1.7160068
A = 1372.80
Hiralee Lalitkumar Makwana has almost two years of teaching experience. She is a number ninja as she loves numbers. Her interest in numbers can be seen in the way she cracks math puzzles and hidden patterns.
: She loves to read number jokes and games.