Question
Investor A deposits 1,000 into an account that earns an interest rate of 6% per annum compounded semi-annually.
On the same date, Investor B deposits 800 into an account that earns an interest rate of 8% per annum compounded monthly.
After how many years does Investor B’s account balance first exceed Investor
A’s?
On the same date, Investor B deposits 800 into an account that earns an interest rate of 8% per annum compounded monthly.
After how many years does Investor B’s account balance first exceed Investor
A’s?
Answers
Steve
1000(1+.06/2)^2t <= 800(1+.08/12)^12t
t >= 10.8 years
t >= 10.8 years