Question 148108: I have two formulas and not sure which one to use.
A=Pe^(rt) or A=P(1+r/t)^tn
question is
Meredith won $150,000 in the lottery and decides to invest the money for her retirement in 20 years. In each option what amount will be produced and which option will produce the most money for her retirement?
A. a certificate of deposit paying 5.4% compounded yearly?
B. a money market certificate paying 5.35% compounded semiannually?
C. a bank account paying 5.25% compounded monthly?
Answer by checkley77(12844)   (Show Source):
You can put this solution on YOUR website! The formula you want is [A=P(1+r/n)^tn
a) A=150,000(1+.054/1)^20*1
A=150,000(1+.054)^20
A=150,000(1.054)^20
A=150,000*2.863
A=$429,440.97 is the amount after 20 years @ 5.4%.
b)A=150,000(1+.0535/2)^20*2)
A=150,000(1+.02675)^40
A=150,000(1.02675)^40
A=150,000*2.87467
A=$421,200.96 is the amount after 20 years @ 5.35%.
c) A=150,000(1+.0525/12)^20*12
A=150,000(1+.004375)^240
A=150,000(1.004375)^240
A=150,000*2.8511
A=$427,667.10 is the amount after 20 years @ 5.25%
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