Question
Use the compound interest formulas A = Pert and A = P(1 + 𝑟/n)^nt to solve.
Suppose that you have $11,000 to invest. Which investment yields the greater return over 10 years: 6.25% compounded continuously or 6.3% compounded semiannually? Show your work.
Suppose that you have $11,000 to invest. Which investment yields the greater return over 10 years: 6.25% compounded continuously or 6.3% compounded semiannually? Show your work.
Answers
continuous
A = P e^rt
A = 11,000 e^(.065 *10)
A = 11,000 * 1.9155
semiannual
20 periods at .0315 per period (6.3/2)
1.0315^20 = 1.859
A = 11,000 * 1.859 which is less :(
A = P e^rt
A = 11,000 e^(.065 *10)
A = 11,000 * 1.9155
semiannual
20 periods at .0315 per period (6.3/2)
1.0315^20 = 1.859
A = 11,000 * 1.859 which is less :(
lol thank you so much again :)
You are welcome.
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