Question 960012
8.75% compounded continuously 


{{{A = P*e^(r*t)}}}


{{{A = 3000*e^(0.0875*10)}}} Note: 'e' is the constant 2.718 approximately (it's a lot like pi)


{{{A = 7196.6258819035}}} Use a calculator for this step


{{{A = 7196.63}}} Use a calculator for this step


If you invest $3000 over 10 years at 8.75% interest compounded continuously, you'll have $7,196.63 in the account. Circle this value since you'll come back to it.


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8.9% compounded semiannually


{{{A = P*(1+r/n)^(n*t)}}}


{{{A = 3000*(1+0.089/2)^(2*10)}}}


{{{A = 7166.22007177676}}}


{{{A = 7166.22}}}


For the second compounded annually option, we'll have $7,166.22 in the account


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Summary:


8.75% compounded continuously will have $7,196.63 in the account after the 10 yr period
8.9% compounded semiannually will have $7,166.22 in the account after the 10 yr period


So the first option "8.75% compounded continuously" is the better option since you're earning roughly $30 more.

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