Question 31329: Use compound the interest formulas
A=P(1 +r/n) ^nt and A = Pe^rt
Suppose that you have $14,000.00 to invest. Which investment yields the greater return over 10 years: 7% compounded monthly or 6.85% compounded continuously? I know what the answer is but I don't know how to get there.
Thanks for your assistance.
Answer by Nate(3500)   (Show Source):
You can put this solution on YOUR website! Compounded monthly:
a=P(1+r)^t
p=initial amount
a=increased amount
r= rate
t=time
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a=P(1+r)^t
a=(14000)(1.07)^10
about $27,540.12
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compounded monthly:
a=P(1+r/n)^nt
same principles, but you have to deal with compounded as well
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a=P(1+r/n)^nt
a=(14000)(1+0.0685/12)^(120)
about $27,718.77
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COMPOUNDED MONTHLY GIVES YOU MORE!
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