Quan­ti­ta­tive Rea­son­ing

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  • PE2.12
  • April 9, 2015 at 1:30 pm #30087

    Ezra Halleck
    Participant

    12) De­ter­mine the bet­ter in­vest­ment: 6% com­pounded monthly or 6.2% com­pounded semi­an­nu­ally (to get full credit, you must find the ef­fec­tive an­nual rate for both).

    April 19, 2015 at 8:15 pm #30203

    Anne Christelle Duchemin
    Participant

    lets say amount in­vested is $100 for a year
    A=P(1+r/n)^nt
    A=100(1+.06/12)^12(1) A=100(1+.062/2)^2(1)
    A=106.1677 A=106.2961
    A=106 A=106

    When rounded both have the same out­come, how­ever 6% com­pounded monthly seems to be the bet­ter op­tion

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