Question

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

Answer 1

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?
A. $11,000 invested at 6.25% compounded continuously over 10 years yields the greater return.
B. Both investment plans yield the same return.
C. $11,000 invested at 6.3% compounded semiannually over 10 years yields the greater return.

Answer 2

well, for the "continuously compounded" formula
Principal = 11,000
r = 6.25% = 0.0625
t = 10

and for the compound interest formula
Principal = 11,000
r = 6.3% = 0.063
t = 10
n = periods, semiannual means twice a year, so periods is only = 2

so, plug the values in, see which one gives you more :)

Answer 3

in case you don't know the continuously compounded formula uses \(\huge Pe^{rt}\) where \(\huge e \)is the Euler constant, and you can find that in your calculator

Answer 4

@jim_thompson5910 can you give me a little more explaining & help me threw the problem

Answer 5

where are you stuck?

Answer 6

alll of it i dont understand how i start to figure it out.

Answer 7

so jdoe0001's explanation doesn't help at all?

Answer 8

a little bit but im still confuseed

Answer 9

all you're doing is plugging the given values (that jdoe0001 pointed out) into the formulas

Answer 10

and keep in mind that 'e' is a constant (like pi)

Answer 11

After plugging in the numbers, wouldn't the answer be C?