Which investment will earn more money, a $1,000.00 investment for 6 years at 8% compounded continuously or a $1,000.00 investment for 6 years at 9% compounded quarterly a) 8% compounded continuously would be worth $. (Round to 2 decimal places.) b) 9% compounded quarterly would be worth $. (Round to 2 decimal places.) c) 8% compounded continuously would be worth more 9% compounded quarterly would be worth more The would be worth the same.
Which investment will earn more money, a $1,000.00 investment for 6 years at 8% compounded continuously or a $1,000.00 investment for 6 years at 9% compounded quarterly a) 8% compounded continuously would be worth $. (Round to 2 decimal places.) b) 9% compounded quarterly would be worth $. (Round to 2 decimal places.) c) 8% compounded continuously would be worth more 9% compounded quarterly would be worth more The would be worth the same.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Which investment will earn more money, a $1,000.00 investment for 6 years at 8% compounded continuously or a $1,000.00 investment for 6 years at 9% compounded quarterly
a) 8% compounded continuously would be worth $. (Round to 2 decimal places.)
b) 9% compounded quarterly would be worth $. (Round to 2 decimal places.)
c)
- 8% compounded continuously would be worth more
- 9% compounded quarterly would be worth more
- The would be worth the same.
Expert Solution
Step 1
Future value of investment with continuous compounding is calculated using following equation
Future value =
Where, PV is present value of investment
r is rate of interest
t is time in years
Future value of investment with quarterly compounding is calculated as
Future value =
Where, r is quarterly rate of interest
n is number of quarterly periods
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education