document.write( "Question 1202153: Parents of a newborn baby are given a gift of Php 50,000 and will choose between two options to invest
\n" ); document.write( "for their child’s college fund. Option 1 is to invest the gift in a fund that pays an average annual interest
\n" ); document.write( "rate of 8% compounded semiannually; option 2 is to invest the gift in a fund that pays an average
\n" ); document.write( "annual interest rate of 7.75% compounded continuously. Which is the better option, assuming each
\n" ); document.write( "investment has a term of 18 years? Why? Support your answer with calculations. \n" ); document.write( "

Algebra.Com's Answer #836791 by ikleyn(52799) $\"\"$ $\"About$

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\n" ); document.write( "Parents of a newborn baby are given a gift of Php 50,000 and will choose between two options to invest
\n" ); document.write( "for their child’s college fund. Option 1 is to invest the gift in a fund that pays an average annual
\n" ); document.write( "interest rate of 8% compounded semiannually; option 2 is to invest the gift in a fund that pays
\n" ); document.write( "an average annual interest rate of 7.75% compounded continuously. Which is the better option, assuming
\n" ); document.write( "each investment has a term of 18 years? Why? Support your answer with calculations.
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document.write( "Lets calculate one year growing coefficient: it is enough to make a selection.\r\n" );
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document.write( "Option 1 has one year growing coefficient   =  = 1.0816.\r\n" );
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document.write( "Option 2 has one year growing coefficient  =  = 1.08058 (rounded).\r\n" );
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document.write( "Comparing, it is clear that option 1 is better (without making long calculations for 18 years).\r\n" );
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