Question 1121519
an investment of 15,000 compounded continuously for 7 years uses the formula:


f = p * e^(rn)


p = principal or present value
f = future value
r = interest rate per time period
n = number of time periods.


in your problem, this equation becomes f = 15,000 * e^(.055*7)


solve for f to get:


f = 22,044.21482


an investment of 15,000 compounded monthly for 7 years uses the formula:


f = p * (1+r)^n


f = future value
p = principal or present value
r = interest rate per time period
n = number of time periods.


time period is in months.
take annual interest rate and divide it by 12 to get .055/12 per month.
take number of years and multiply them by 12 to get 7*12 = 84 months.


in your problem, this equation becomes f = 15,000 * (1 + .055/12) ^ (7*12)


solve for f to get:


f = 22,024.83315


compare that to continuous compounding which gets you f = 22,044.21482.


continuous compounding gives you 22,044.21482 minus 22,024.83315 equals 19.38167648 more dollars in interest than monthly compounding.