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.

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.

astrophysics · Answer

Lets first understand what all the variables in the formula mean dw:1447392144095:dw|

astrophysics · Answer

|dw:1447392164046:dw|

astrophysics · Answer

So P = 11,000, r = 0.0625, t = 10 since it's 10 years for compounded continuously

anonymous · Answer

now what?

astrophysics · Answer

Plug into the formula..

astrophysics · Answer

Similarly you can find semi annually which just means n = 2 and the rate is changed