how much more would you earn in the first investment than in the second investment? $52,000 invested for 30…
how much more would you earn in the first investment than in the second investment? $52,000 invested for 30 years at 12% compounded annually $52,000 invested for 30 years at 6% compounded monthly click the icon to view some finance formulas. you would earn $ more on the first investment than in the second investment. (round to the nearest dollar as needed.)
Answer
Explanation:
Step1: Calculate first - investment amount
Use compound - interest formula $A = P(1 + r)^t$, where $P=$52000$, $r = 0.12$, and $t = 30$. $A_1=52000\times(1 + 0.12)^{30}$ $A_1=52000\times(1.12)^{30}$ $(1.12)^{30}\approx29.9599227$, so $A_1=52000\times29.9599227\approx1557916$
Step2: Calculate second - investment amount
Use compound - interest formula $A = P(1+\frac{r}{n})^{nt}$, where $P = 52000$, $r=0.06$, $n = 12$, and $t = 30$. $A_2=52000\times(1+\frac{0.06}{12})^{12\times30}$ $A_2=52000\times(1 + 0.005)^{360}$ $(1.005)^{360}\approx6.0225752$, so $A_2=52000\times6.0225752\approx313174$
Step3: Find the difference
$A_1−A_2=1557916 - 313174=1244742$
Answer:
$1244742$