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March 30, 2017

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Cliff has some money he wants to invest for his retirement. He is offered two options: 10%/a simple interest or 5%/a compounded annually. Under what conditions should he choose the first option

  • Math - ,

    1.05^n = 1+.1n
    easiest to make a table
    n 1.05^n 1+.1n
    1 1.05 1.10
    5 1.27 1.50
    10 1.63 2
    20 2.65 3
    30 4.32 4 here the compounding has gotten ahead so look closer between 20 years and 30 years.

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