Question
W5.1 Suppose that you have $10,000 to invest over a 3 year period. There are two accounts to choose from: 4% compounded monthly or 3.5%
W5.1
Suppose that you have $10,000 to invest over a 3 year period. There are two accounts to choose from: 4% compounded monthly or 3.5% compounded continuously.
a.Write the formula for the first account's compound interest for n compoundings per year.
b.Write the formula for the account with continuously compounded interest.
c.Use the formulas and information above to solve for the balance of each investment after 3 years.
d.Which investment account offers a better return on your money?
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Making Hard Decisions with decision tools
Authors: Robert Clemen, Terence Reilly
3rd edition
538797576, 978-0538797573
