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The traditional finite-difference time-domain (FDTD) formulation is extended to include a discrete time-domain convolution, which is efficiently evaluated using recursion. The accuracy of the extension is demonstrated by computing the reflection coefficient at an air-water interface over a wide frequency band including the effects of the frequency-dependent permittivity of water. Extension to frequency-dependent permeability and to three dimensions is straightforward. The frequency dependent FDTD formulation allows computation of electromagnetic interaction with virtually any material and geometry (subject only to computer resource limitations) with pulse excitation. Materials that are highly dispersive, such as snow, ice, plasma, and radar-absorbing material, can be considered efficiently by using this formulation.