SOLUTION: Use a=p(1 + r/n)^nt + a=Pe^rt to solve Suposse that you have $7000 to invest which investment yeilds the greater return over 8 years: 8.75% compounded continuesly or 8.9% c

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Question 79064: Use a=p(1 + r/n)^nt + a=Pe^rt to solve

Suposse that you have $7000 to invest which investment yeilds the greater return over 8 years:
8.75% compounded continuesly or 8.9% compunded semiannually?
Answer by rapaljer(4671) About Me  (Show Source):
You can put this solution on YOUR website!
When compounding semiannually, let n= 2 in this formula, P=$7000, t=8, and r=.089
A=P%281+%2B+r%2Fn%29%5E%28nt%29+
A=7000%281+%2B+.089%2F2%29%5E%2816%29+
A=$14048.60

When compounding continuously, use this formula, P=$7000, t=8, and r=.0875
A=Pe%5E%28rt%29
A=7000e%5E%28.0875%2A8%29
A=$14096.27

If I did the calculations right, it looks like the continous compounding at a slightly lower rate came out better!

R^2 at SCC