college algebra investment help asap!!!

Question

how much more will an investment of $15,000 earning 6.5% compounded continuously for 5 years earn compared to the same investment at 6.5% compounded monthly for 5 years?

Answer 1

Continuous compounding:

 

A = Pe^rt

 

Where:

• P = the Principle = $15,000
• r = the the annual interest rate expressed as a decimal = 6.5% = 0.065
• t = years = 5

 

A = ($15,000)e^0.065*5

A = ($15,000)e^0.325

 

Use your calculator to compute the answer

 

Monthly compounding:

 

A = P*(1 + r/12)^12t

 

Where P = $15,000, r = 0.065 and t = 5 years.

 

A = ($15,000)(1 + 0.065/12)^12*5

A = ($15,000)(1.00541)⁶⁰

 

Use your calculator to get the answer.

 

The final answer is A(Continuous) - A(Monthly).