document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=116885>Question 116885</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 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<BR>\n" );
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document.write( "A is the amount of the return.<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 number of compound periods in one year.<BR>\n" );
document.write( "t is the number of years.\r<BR>\n" );
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document.write( "Carry all calculations to six decimals on each intermediate step, then round the final answer to the nearest cent.\r<BR>\n" );
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document.write( "Suppose you deposit $4,000 for 8 years at a rate of 7%.\r<BR>\n" );
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document.write( "Calculate the return (A) if the bank compounds monthly (n = 12).  Round your answer to the hundredth's place.\r<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 #85049 by </B><A HREF=/tutors/aboutme.mpl?userid=checkley71><B>checkley71(8403)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=checkley71><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/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=85049\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> A=P(1+R/N)^RT<BR>\n" );
document.write( "A=4,000(1+.07/12)^.07*8<BR>\n" );
document.write( "A=4,000(1+.0058333)^.56<BR>\n" );
document.write( "A=4,000(1.0058333)^.56<BR>\n" );
document.write( "A=4,000*1.00326<BR>\n" );
document.write( "A=4,013.05 WHICH I BELIEVE IS THE WRONG ANSWER.<BR>\n" );
document.write( "I BELIEVE THE FORMULA SHOULD BE:<BR>\n" );
document.write( "A=P(1+R/N)^NT<BR>\n" );
document.write( "A=4,000(1+.07/12)^12*8<BR>\n" );
document.write( "A=4,000(1.0058333)^96<BR>\n" );
document.write( "A=4,000*1.74782<BR>\n" );
document.write( "A=6,991.28 THIS IS A MUCH BETTER RETURN ON INVESTMENT FOR MONTHLY COMPOUNDING.  </SPAN>\n" );
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