Question

Please Help !!Mr. Mudd gives each of his children $2000 to invest as part of a friendly family competition. The competition will last 10 years. The rules of the competition are simple. Each child can split up his or her $2000 into as many separate investments as they please. The children are encouraged to do their research on types of investments. The initial investments made may not be changed at any point during the 10 years; no money may be added and no money may be moved. Whichever child has made the most money after 10 years will be awarded an additional $10,000.

Answer 1

Answer:

Albert = $2159.07; Marie = $2244.99; Hans = $2188.35; Max = $2147.40

Marie is $10 000 richer

Step-by-step explanation:

Albert

(a) $1000 at 1.2 % compounded monthly

$A = P\left(1 + \dfrac{r}{n}\right)^{nt}$

A = 1000(1 + 0.001)¹²⁰ = $1127.43

(b) $500 losing 2%

0.98 × 500 = $490

(c) $500 compounded continuously at 0.8%

$\begin{array}{rcl}A & = & Pe^{rt}\\& = & 500e^{0.008 \times 10}\\& = &\mathbf{\ 541.64}\\\end{array}$

(d) Balance

Total = 1127.43 + 490.00+ 541.64 = $2159.07

Marie

(a) 1500 at 1.4 % compounded quarterly

A = 1500(1 + 0.0035)⁴⁰ = $1724.99

(b) $500 gaining 4 %

1.04 × 500 = $520.00

(c) Balance

Total = 1724.99 + 520.00 = $2244.99

Hans

$2000 compounded continuously at 0.9 %

$\begin{array}{rcl}A& = &2000e^{0.009 \times 10}\\& = &\mathbf{\ 2188.35}\\\end{array}$

Max

(a) $1000 decreasing exponentially at 0.5 % annually

A = 1000(1 - 0.005)¹⁰= $951.11

(b) $1000 at 1.8 % compounded biannually

A = 1000(1 + 0.009)²⁰ = $1196.29

(c) Balance

Total = 951.11 + 1196.29 = $2147.40

Marie is $ 10 000 richer at the end of the competition.