Respuesta :
Answer:
You would $3,825,999 more on the first investment than in the second investment
Step-by-step explanation:
This is a compound interest problem.
The compond interest formula is given by:
[tex]A = P(1 + \frac{r}{n})^{nt}[/tex]
In which A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.
The first investment:
A: our earnings, what we have to find
P = initial investment = 22,000
r = 0.14
n = 1
t = 40
[tex]A = P(1 + \frac{r}{n})^{nt} = 22,000(1+\frac{0.14}{1})^{40} = $4,155,437.30[/tex]
In the first investment, you would earn $4,155,437.30
The second investment:
A: our earnings, what we have to find
P = initial investment = 22,000
r = 0.07
n = 1
t = 40
[tex]A = P(1 + \frac{r}{n})^{nt} = 22,000(1+\frac{0.07}{1})^{40} = $329,438.07[/tex]
In the second investment, you would earn $329,438.07.
The difference
4,155,437.30 - 329,438.07 = $3,825,999.
You would $3,825,999 more on the first investment than in the second investment
