Question

How much more would you earn in the first investment than in the second​ investment? ​$22 comma 000 invested for 30 years at 12​% compounded annually ​$22 comma 000 invested for 30 years at 6​% compounded annually You would earn ​$ nothing more on the first investment than in the second investment. ​(Round to the nearest dollar as​ needed.)

Answer 1

Answer:

Therefore I would earn $532,761 more on the first investment than in the second investment.

Step-by-step explanation:

The formula of compound interest

$A=P(1+r)^n$

Compound interest $I=A-P$

A= Amount after n years

P= Principal

r=Rate of interest

n= Number of years

First investment,

P₁=$22,000, r=12%=0.12 and n=30 years

$A_1= 22,000(1+0.12)^{30}$

    =659,118.28

   ≈$659,118

$I_1$= $A_1$-P₁

  =$(659,118-22,000)

 =$637,118

Second investment,

P₂=$22,000, r=6%=0.06 and n=30 years

$A_1= 22,000(1+0.06)^{30}$

    =126,356.81

   ≈$126,357

$I_2$= $A_2$-P₂

  =$(126,357-22,000)

  =$104357

$I_1-I_2$

=$(637,118-104,357)

=$532,761

Therefore I would earn $532,761 more on the first investment than in the second investment.