document.write( "Question 1144521: Linda invests $12,000 earned by winning a singing contest in a certificate of deposit paying 1.5% interest compounded monthly. What are the total amount and the interest?\r
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Algebra.Com's Answer #765661 by ikleyn(52786) $\"\"$ $\"About$

You can put this solution on YOUR website!
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document.write( "The 1.5% annual interest compounded monthly is nominal (i.e., NOT factual).\r\n" );
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document.write( "The factual multiplicative rate of growth is    per month.\r\n" );
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document.write( "It means, that at the end of every month the amount at the account increases with the factor .\r\n" );
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document.write( "So, the original amount of 12000 dollars will be    dollars at the end of the 1-st month;\r\n" );
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document.write( "                                         will be    dollars at the end of the 2-nd month;\r\n" );
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document.write( "                                         will be    dollars at the end of the 3-rd month;\r\n" );
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document.write( "     . . . . . . .   and  so  on  . . . . . \r\n" );
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document.write( "                                         will be    dollars at the end of the 12-nd month, \r\n" );
document.write( "                                         i.e. after 1 year.\r\n" );
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document.write( "So, after 1 years (12 compounding periods) the amount will be  \r\n" );
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document.write( "    Future Value =  = 12181.24  dollars.\r\n" );
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document.write( "The factual annual interest is then   = 0.015103 = 1.5103%.\r\n" );
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document.write( "The formula for the future value works for any given number of compounding periods, too\r\n" );
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document.write( "    Future Value =  ,\r\n" );
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document.write( "where \"n\" is the number of months.\r\n" );
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\n" ); document.write( "\n" ); document.write( "Notice that your post is INCOMPLETE, since it does not say how long is the total time period.\r
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\n" ); document.write( "\n" ); document.write( "The correct question should be\r
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document.write( "    What are the total amount and the interest in 1 year ?   in 2 years ?  in 5 years ?    or in 18 months,  and so on . . . \r\n" );
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\n" ); document.write( "\n" ); document.write( "As my gift to you please consider this relevant lesson\r
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\n" ); document.write( "\n" ); document.write( "I hope it will make your knowledge wider and deeper.\r
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