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22 January, 01:11

suppose you have $11000 to invest. which of the two rates would yield the larger amount in 5 years: 6% compounded monthly or 5.86% compounded continuously?

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  1. 22 January, 01:27
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    6% monthly

    Step-by-step explanation:

    The monthly rate being compounded when the interest is 6% per year is ...

    6%/12 = 0.5%

    so the multiplier each month is

    1 + 0.5% = 1.005

    ___

    The monthly multiplier when 5.86% is compounded continuously is ...

    e^ (5.86%/12) ≈ 1.004895

    The 6% rate will give a larger yield after any length of time.
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