Jenny decides to invest $100,000 into a retirement saving account. The financial advisers give her two options. One an interest of 7.5% compound quarterly, while the other is earning 1.5% interest compound continuously. Jenny plans to invest her money for at least 20 years, help Jenny to decide which one is a better investment choices by calculating the difference in earning both options.

Question

mertsj · Answer

$$A=100000(1+\frac{.075}{4})^{4(20)}=$441987.25$$
or:
$$A=100,000e ^{.015(20)}=$134985.88$$

anonymous · Answer

@Mertsj Are those the final answers for each?

mertsj · Answer

yes

anonymous · Answer

Is the second one 100,000e^.015(20)?

mertsj · Answer

yes

anonymous · Answer

@Mertsj  where did the 4 come from?

mertsj · Answer

compounded quarterly.  That is 4 times per year.

anonymous · Answer

Excellent. Thank you!

mertsj · Answer

yw