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1.     Gregory may choose between two accounts in which to invest $8,000. Account A offers 2.5% annual interest compounded monthly. Account B offers continuous compound interest. Greg plans to leave his investment untouched (no further deposits and no withdrawals) for 12 years.

(a)   Which account will yield the greater balance at the end of 12 years? Show Work

(b) How much more money does Greg earn by choosing this more profitable account? Show work

 Dec 4, 2020
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 2.5% compounded monthly     monthly i = .025/12    months = 144 months

    8000 ( 1 + .025/12)144 = $.........   at end of 12 years

 

continous compounding at 2.5% (I assume)

   8000 e.025(12) = $...........   at end of 12 years 

 Dec 4, 2020

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