Use the compound interest formulas A = Pert and A = P(1 + 𝑟/n)^nt to solve.

Question

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.

Answer 1

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 :(

Answer 2

lol thank you so much again :)

Answer 3

You are welcome.