SOLUTION: Joseph invests $1000 at a rate of 7% compounded monthly for 10 years. Sarah invests $1000 at the same rate for the same time, but her investment is compounded continuously. What is

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: Joseph invests $1000 at a rate of 7% compounded monthly for 10 years. Sarah invests $1000 at the same rate for the same time, but her investment is compounded continuously. What is      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 1133542: Joseph invests $1000 at a rate of 7% compounded monthly for 10 years. Sarah invests $1000 at the same rate for the same time, but her investment is compounded continuously. What is the difference in total money made by each? Identify who made more and by how much.

Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
Joseph 1000(1+(r/n))^120 (120 months). This is 1.0058333^120*1000, round at end only.
=$2009.66 consistent with rule of 70
Sarah 1000*(e^(.07*10)) where 1000*e^(rt) is formula for continuous compounding.
=$2013.75, making $4.09 more.