Suppose that you have 14,000 to invest. Which investment yields the greater return over 10 years: 7 percent compund monthly or 6.85 compunded continuosly?
I kind of get the problem but i cant figure out what to plug in for n i know n=monthly compounding but can anyone show me how to do the problem or how to figure out what n is
2007-11-29 07:21:19 · 2 answers · asked by Anonymous in Science & Mathematics ➔ Mathematics
welll what would compunded annually be for n
2007-11-29 07:33:18 · update #1
compouding monthly means 12 times a year. so the value of n is 12
I = P(1 + r/n)^(nt)
I = final amount after t years
P = intial amount
r = rate
n = compounding
t = time
plug in chunks
I = 14,000 (1 + .07/12)^(12*10)
compounding continously
I = Pe^(rt)
plug in chunks
I = 14,000e^(.0685*10)
now just grab a calculator.
Rec
2007-11-29 07:28:49 · answer #1 · answered by Anonymous · 0⤊ 0⤋
calculate (1+0.07/12)^120 and e^0.0685*10
The first gives you 2.0097 and the second 1.9838
So invest at 7% compounded monthly
2007-11-29 15:32:49 · answer #2 · answered by santmann2002 7 · 0⤊ 0⤋