Suppose that you have $5,000 to invest. Which investment yields the greater return over 5 years: 5.5% compounded monthly or 5.25% compounded continuously? Use the following formulas A=P(1+r/n)^nt and A=Pe^rt to solve.
The amount (as long as it's the same in both situations) is irrelevant
Under the first scenario, we have (1 + .055/12)^(12* 5) = 1.3157037725362119
Under the second scenario, we have e^(.0525 * 5) = 1.300176468168491
The first option is better......
