document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1202015>Question 1202015</A>: <I><SPAN STYLE=\"word-break: break-all;\"> An amount of $1100 is deposited for 6 years in an account that earns 6% interest. (Round your answers to two decimal places.)<BR>\n" );
document.write( "(a) Calculate the simple interest earned.<BR>\n" );
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document.write( "(b) Calculate the interest earned if interest is compounded daily.<BR>\n" );
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document.write( "(c) How much more interest is earned on the account when the interest is compounded daily?<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #836638 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=836638\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> sinple interest is i = p * r * n<BR>\n" );
document.write( "i is the intereest<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.<BR>\n" );
document.write( "the time periods are in years.\r<BR>\n" );
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document.write( "when n = 6 years and r = .06 per year, you get:<BR>\n" );
document.write( "p = 1100<BR>\n" );
document.write( "r = .06<BR>\n" );
document.write( "n = 6\r<BR>\n" );
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document.write( "formula becomes:<BR>\n" );
document.write( "i = 1100 * .06 * 6 = 396.\r<BR>\n" );
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document.write( "if the interest rate is compounded daily the formula becomes:<BR>\n" );
document.write( "i = f - p<BR>\n" );
document.write( "i is the interest<BR>\n" );
document.write( "f is the future value<BR>\n" );
document.write( "p is the present value\r<BR>\n" );
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document.write( "with daily compounding, the time periods are in days.\r<BR>\n" );
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document.write( "since f = p * (1 + r) ^ n, the formula becomes:<BR>\n" );
document.write( "i = p * (1 + r) ^ n - p<BR>\n" );
document.write( "i is the interest<BR>\n" );
document.write( "p is the present value<BR>\n" );
document.write( "r is the interest rate per year / 365 = interest rate per day (365 days assumed in a year).<BR>\n" );
document.write( "n is the number of years * 365 = number of days.\r<BR>\n" );
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document.write( "when n = 365 * 6 and r = .06/365 and p = 1100, the formula becomes:<BR>\n" );
document.write( "i = 1100 * (1 + .06/365) ^ (365  * 6) - 1100 = 476.6157097.\r<BR>\n" );
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document.write( "the difference between the compound interest and the simple interest is 476.6157097 minus 396 = 80.61570989 = 80.62 rounded to two decimal places, in favor of the compound interest..<BR>\n" );
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