Question
Which is worth more after 5 years, an investment of $1000 at 5% interest compounded semi - annually(twice a year). or an investment of $1000 at 5% interest compounded continuously?
Answers
Reiny
a)
amount = 1000(1.025)^10
= 1280.08
b)
amount = 1000 e^(5(.05))
= 1000 e^.25
= 1284.03
amount = 1000(1.025)^10
= 1280.08
b)
amount = 1000 e^(5(.05))
= 1000 e^.25
= 1284.03