Note that in the case of daily compounding, the year-end balance will be
$119.72, which is $1.72 more than the simple interest case. (So it is no wonder
that the credit card companies usually charge interest compounded daily when
determining the balance.) Also note that compounding at smaller time intervals,
even at the end of each second, does not change the result, and we suspect
that instantaneous compounding using “differential” time intervals dt will
give the same result. This suspicion is confirmed by obtaining the differential equation dA/dt iA for the balance A, whose solution is A A0 exp(it). Substitution
yields