Jim places $10,000 in a bank account that pays 9.8% compounded continuously. after 2 years, will he have enough money to buy a car that costs $12 comma 160? if another bank will pay jim 10% compounded semiannually, is this a better deal?

9.8% compounded continuously is a better deal

Step-by-step explanation:

Given that Jim wants to buy a car which costs 12160 after 2 years.

He has two options before him,

i) 9.8% compounded continuously

ii) 10% compounded semiannually

Principal he has is 10000 dollars

Hence we have

Value after 2 years for option i) =

(after rounding off to two decimals)

Option ii)

For compounding continuously for 4 half years we get

Final amount =

(after rounding off to two decimals)

Comparing we find sufficient cash is provided by option I