Tough Math problem?

The formula for calculating the amount of money returned for an initial deposit into a bank account or CD (certificate of deposit) is given by A= P(1+r/n)^nt. ^nt means to the nt power.

A is the amount of the return.

P is the principal amount initially deposited.

r is the annual interest rate (expressed as a decimal).

n is the number of compound periods in one year.

t is the number of years.

Carry all calculations to six decimals on each intermediate step, then round the final answer to the nearest cent.

Suppose you deposit $4,000 for 8 years at a rate of 7%.

So my question is calculate the return (A) if the bank compounds annually (n = 1). Round your answer to the hundredth%26#039;s place. Also calculate the return (A) if the bank compounds monthly (n = 12). Round your answer to the hundredth%26#039;s place.

Tough Math problem?exchange rate

1. compounding annually

A= P(1+r/n)^nt

P = 4000

r = .07

n = 1

t = 8

A = 4000 x (1+.07/1)^(1x8) = 4000 x (1.07)^8 = $6,872.75

2. compounded monthly

P = 4000

r = .07

n = 12

t = 8

A= P(1+r/n)^nt = 4000 x (1+.07/12)^(12*8) = 4000 x (1.005833)^96 = $6,991.31

Tough Math problem?

loan

Assuming you don%26#039;t want to see the arithmetic,

A = 4000*(1 + .07/1)^(1*8) = 4000*(1.07)^8

A = 4000*1.718186 = $6,872.74 (compounded yearly)

A = 4000*(1 + .07/12)^(12*8) = 4000*(1 + .005833)^96

A = 4000*(1.005833)^96 = 4000*1.747826 = $6,991.31 (compounded monthly)