College Algebra (10th Edition)

Published by Pearson
ISBN 10: 0321979478
ISBN 13: 978-0-32197-947-6

Chapter 6 - Section 6.7 - Financial Models - 6.7 Assess Your Understanding - Page 476: 51

Answer

Will.

Work Step by Step

The amount A after t years due to a principal P invested at an annual interest rate r, expressed as a decimal, compounded n times per year is $A=P\displaystyle \cdot(1+\frac{r}{n})^{nt}$ If compounding is continuous, $A=Pe^{rt}$ --- Will: $A=2000\displaystyle \left(1+\frac{0.09}{2}\right)^{(2)(20)}={{\$}} 11,632.73$ Henry: $A=2000e^{(0.085)(20)}={{\$}} 10,947.89$ After 20 years, Will has more than Henry.
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