document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1131240>Question 1131240</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A=P+P*r*t<BR>\n" );
document.write( "What order would I do this in?\r<BR>\n" );
document.write( "\n" );
document.write( "where A is the Amount (total principal plus interest) required to repay the loan, P is the Principal, r is the annual interest rate (quoted as a percent, but used as a decimal), and t is the time in years.\r<BR>\n" );
document.write( "\n" );
document.write( "Complete the table below with the amounts you would have if you invested $1,000 at 7% interest with simple interest and with interest compounded annually.\r<BR>\n" );
document.write( "\n" );
document.write( "Year Simple Interest  Compound Interest<BR>\n" );
document.write( "1yr $______________   $____________<BR>\n" );
document.write( "2yr $_______________  $____________<BR>\n" );
document.write( "3yr $______________   $_____________<BR>\n" );
document.write( "4yr $______________   $_____________ </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #747999 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=747999\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the simple interest formula is f = p + p * r * n<BR>\n" );
document.write( "f is the future value<BR>\n" );
document.write( "p is the present value<BR>\n" );
document.write( "r is the interest rate per time period.<BR>\n" );
document.write( "n is the number of time period.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "f is the same as A in your formula.<BR>\n" );
document.write( "n is the same as t in your formula.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "the compound interest formula is f = p * (1 + r) ^ n<BR>\n" );
document.write( "f is the future value<BR>\n" );
document.write( "p is the present value<BR>\n" );
document.write( "r is the interest rate per time period.<BR>\n" );
document.write( "n is the number of time periods.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "your problem statement is:\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "Complete the table below with the amounts you would have if you invested $1,000 at 7% interest with simple interest and with interest compounded annually.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "when solving these problems:\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "p = 1000<BR>\n" );
document.write( "r = .07 per year<BR>\n" );
document.write( "n = number of years\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "you apply these formula as shown in the following example for when n = 4.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "when n = 4:\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "f = p + p * r * n becomes f = 1000 + 1000 * .07 * 4 = 1280 (simple interest)\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "f = p * (1 + r) ^ 4 becomes f = 1000 * (1 + .07) ^ 4 = 1310.79601 (compound interest)\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "all the solutions are shown below.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<PRE STYLE=\"white-space: pre-wrap; white-space: -moz-pre-wrap; white-space: -pre-wrap; white-space: -o-pre-wrap; word-wrap: break-word;\">\r\n" );
document.write( "Year      Simple Interest      Compound Interest\r\n" );
document.write( "\r\n" );
document.write( "1yr       $______2070________      $_____1070_______\r\n" );
document.write( "\r\n" );
document.write( "2yr       $______1140________      $_____1144.9_____\r\n" );
document.write( "\r\n" );
document.write( "3yr       $______1210________      $_____1225.043___\r\n" );
document.write( "\r\n" );
document.write( "4yr       $______1280________      $_____1310.79601_\r\n" );
document.write( "</PRE><BR>\n" );
document.write( "as n gets larger, the difference between compound interest formula and simple interest formula becomes greater and greater in favor of compound interest formula.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "this is because you are earning interest on interest with the compound interest formula while you are only earning interest on the original principal with simple interest formula.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "the compound interest formula is the equivalent of taking what you earned each year and then adding it to the principal in your account for the following year.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );