Question

Use the compound interest formulas A = P1+
and A = Pert to solve.
Suppose that you have $11,000 to invest. Which investment yields the greater return over 9 years: 7.5% compounded
continuously or 7.6% compounded semiannually?

Answer 1

Answer:

7.5% compounded continuously yields the greatest return after 9 years

Step-by-step explanation:

Compounded interest = P(1+r/n)^(nt), where P is the principle, r is the rate of interest, n is the number of times compounded annually, and t is the time of the investment.

7.6% compounded semiannually:

I = 11000(1+0.076/2)^(2*9) --> 11000(1.038)^18 ~ $21525.09

7.5% compounded continuously:

Since it is compounded continuously, we use the mathematical constant e.

I = 11000e = $29901.01