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
^{nt})
So, if you consider  , then ^{nt}) is the factor by which is multiplied. Then ^{nt}\ -\ 1) , multiplied by 100 to convert to percent, becomes the APY.
^{nt}\ -\ 1\]\ \times\ 100)
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
\ \times\ 100)
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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