Question 342025: Consider the three investment plans below. Which one of the investment plans produces the worst yield? Which one produces the best yield?
Plan A) $10,000 invested for 5 years at 5%, compounded continuously.
Plan B) $9,000 invested for 5 years at 5.25%, compounded daily.
Plan C) $11,000 invested for 5 years at 4.5%, compounded monthly.
Carefully explain your solutions to each of the questions above.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Consider the three investment plans below. Which one of the investment plans produces the worst yield? Which one produces the best yield?
Plan A) $10,000 invested for 5 years at 5%, compounded continuously.
Use A(t) = P*e^(rt) where P = 10,000 ; r = 0.05 ; t = 5
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Plan B) $9,000 invested for 5 years at 5.25%, compounded daily.
Use A(t) = P(1+(r/n))^(nt) where P=9,000;r = 0.0525;n = 365;t=5
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Plan C) $11,000 invested for 5 years at 4.5%, compounded monthly.
Use A(t) = P(1+(r/n))^(nt) where P = 11000; r = 0.045 ; n = 12; t= 5
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Cheers,
Stan H.
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