document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=33153>Question 33153</A>This question is from textbook <A HREF=http://www.amazon.com/exec/obidos/ASIN/0321279085/algebrahomeworkh>college algebra</A><BR>\n" );
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document.write( "3)The formula for calculating the amount of money returned for an initial deposit money into a bank account or CD (Certificate of Deposit) is given by\r<BR>\n" );
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document.write( "A is the amount of returned.<BR>\n" );
document.write( "P is the principal amount initially deposited.<BR>\n" );
document.write( "r is the annual interest rate (expressed as a decimal).<BR>\n" );
document.write( "n is the compound period.<BR>\n" );
document.write( "t is the number of years.\r<BR>\n" );
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document.write( "Suppose you deposit $10,000 for 2 years at a rate of 10%.<BR>\n" );
document.write( "a)Calculate the return (A) if the bank compounds annually (n = 1).<BR>\n" );
document.write( "Answer:	\r<BR>\n" );
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document.write( "b)Calculate the return (A) if the bank compounds quarterly (n = 4).<BR>\n" );
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document.write( "c)Calculate the return (A) if the bank compounds monthly (n = 12).<BR>\n" );
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document.write( "d)Calculate the return (A) if the bank compounds daily (n = 365).<BR>\n" );
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document.write( "e)What observation can you make about the increase in your return as your compounding increases more frequently? <BR>\n" );
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document.write( "f)If a bank compounds continuous, then the formula takes a simpler, that is \r<BR>\n" );
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document.write( "where e is a constant and equals approximately 2.7183.<BR>\n" );
document.write( "Calculate A with continuous compounding. <BR>\n" );
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document.write( "g)Now suppose, instead of knowing t, we know that the bank returned to us $15,000 with the bank compounding continuously. Using logarithms, find how long we left the money in the bank (find t). <BR>\n" );
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document.write( "h)A commonly asked question is, “How long will it take to double my money?” At 10% interest rate and continuous compounding, what is the answer? <BR>\n" );
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document.write( " </SPAN>\n" );
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