SOLUTION: Investment Fund A offers a 10.2% nominal rate compounded quarterly, while Fund B offers a nominal rate of 10.18% compounded continuously. Rounding to three decimal places, the

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Question 1177633: Investment Fund A offers a 10.2% nominal rate compounded quarterly, while Fund B offers a nominal rate of 10.18% compounded continuously.
Rounding to three decimal places,
the APY of Fund A is ___% and the APY of Fund B is ___%. If someone is choosing between the two funds for a 1 year term, they should choose Fund ___ because it will give them a higher return for that year.

This is my final question for today! I will need the calculations & answers please!
Homework question from Hans Beauvoir
Answer by Solver92311(821)   (Show Source): You can put this solution on YOUR website!

Future Value of a single investment
A principal value, , invested at a nominal rate of per annum expressed as a decimal, compounded times per year for years has a future value, , of



So, if you consider , then is the factor by which is multiplied. Then , multiplied by 100 to convert to percent, becomes the APY.



For continuous compounding, the formula is:



Where is the principal invested, is the base of the natural logarithms, is the nominal rate expressed as a decimal, and is the number of years of the investment.

So



All you have to do is plug in the numbers and do the arithmetic.

John

My calculator said it, I believe it, that settles it

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