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Use the compound interest formulas to solve. A = P(1 + r/n)nt and A = Pert Suppose you have $3000 to invest. Which investment yields the greater return over 10 years: Account 1: 6.5% compounded semiannually? Account 2: 6% compounded continuously? The account with the better investment is Account which yields dollars more after 10 years.

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Answer:

Account 1 yields greater return.

Step-by-step explanation:

Lets solve for the first formula:

[tex]A=P(1+\frac{r}{n} )^{nt}[/tex]

First, change 6.5% into a decimal:

6.5% -> [tex]\frac{6.5}{100}[/tex] -> 0.065

Now, plug in the values for Account 1:

[tex]A=3,000(1+\frac{0.065}{2})^{2(10)}[/tex]

[tex]A=5,687.51[/tex]

Now solve for Account 2:

Change 6% into a decimal:

6% -> [tex]\frac{6}{100}[/tex] -> 0.06

Now plug in the values:

[tex]A=3,000e^{0.06(10)}[/tex]

[tex]A=5,466.36[/tex]

Account 1 yields better money after 10 years.

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