SOLUTION: Math obviously is not my strong point especially when it comes to compound interest. If I invest $1000 on May 18th in a savings account that pays 10% interest compounded every m

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Question 295827: Math obviously is not my strong point especially when it comes to compound interest.
If I invest $1000 on May 18th in a savings account that pays 10% interest compounded every month, and I invest $1000 (on the same day) in an account which pays 10% interest that is compounded continuously:
(a) Which will be worth more in one year?

(b) By how much?

Eric
Answer by solver91311(24713) About Me  (Show Source):
You can put this solution on YOUR website!


Obvious to whom?

For an investment of at interest per year (as a decimal) compounded times per year for years.





For an investment of at interest per year (as a decimal) compounded continuously for years. Note: is the base of the natural logarithms. "Inv ln" does the trick quite nicely on the Windows built-in calculator in Scientific mode.





The rest is just calculator work. Whichever comes out larger is the answer to a) and the difference between the two is the answer to b)

John