Question

Compare the balance after 25 years of a $10,000 investment earning 6.75% interest compounded continuously to the same investment compounded semiannually.

Answer 1

repeat from yesterday?

Answer 2

I'm still confused.

Answer 3

do you know the formula for continuous compounding?

Answer 4

No?

Answer 5

use
\[A=P_0e^{rt}\]where \(P_0\) is the principle, in this case \(P_0=\)$10,000
and \(r\) is the interest rates (as a decimal) in this case \(r=.0675\)
and \(t\) is time, in this case \(t=25\)

Answer 6

54059.5?

Answer 7

Would the answer be $10,170.18?

Answer 8

i get your first answer
http://www.wolframalpha.com/input/?i=10000e^%28.0675*25%29

Answer 9

Then what? Is 54059.5 the correct answer?

Answer 10

for the first question, yes

Answer 11

semi - annually is a different formula, means twice a year
use
\[A=P(1+\frac{.0675}{2})^{50}\]

Answer 12

That answer would be 52574.6?

Answer 13

yes

Answer 14

Now what should I do?

Answer 15

it says "compare" so i guess you can either says "first one is larger" or subtract and say " it is larger by ..."

Answer 16

How does this look?
54059.5 is larger than 52574.6 by 1484.9

Answer 17

looks good to me