Question

Gregory may choose between two accounts in which to invest $5000. Account A offers 2.3% annual interest compounded monthly. Account B offers continuous compound interest. Greg plans to leave his investment untouched (no further deposits and no withdrawals) for 10 years.
need help calculating account b's balance​

Answer 1

Answer:

see below

Step-by-step explanation:

principal = $5,000

interest rate = 2.3%

account A: compound monthly for 10 years

account B: compound continuously for 10 years

account A: compound monthly for 10 years

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

  = $5,000 (1 + .023/12)^ 12(10)

 = $6,291.6

account B: compound continuously for 10 years

FVn = PV * e^r*t

       = $5,000 * e ⁽⁰ ⁰²³ˣ¹⁰⁾

       = $6,293

Gregory may chose account B. (but the difference is only $1.40)