SOLUTION: 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)^rt A is the amount of

Question 116885: 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)^rt

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%.
Calculate the return (A) if the bank compounds monthly (n = 12). Round your answer to the hundredth's place.

Answer by checkley71(8403) (Show Source): You can put this solution on YOUR website!
A=P(1+R/N)^RT
A=4,000(1+.07/12)^.07*8
A=4,000(1+.0058333)^.56
A=4,000(1.0058333)^.56
A=4,000*1.00326
A=4,013.05 WHICH I BELIEVE IS THE WRONG ANSWER.
I BELIEVE THE FORMULA SHOULD BE:
A=P(1+R/N)^NT
A=4,000(1+.07/12)^12*8
A=4,000(1.0058333)^96
A=4,000*1.74782
A=6,991.28 THIS IS A MUCH BETTER RETURN ON INVESTMENT FOR MONTHLY COMPOUNDING.
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