document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=116886>Question 116886</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<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( "Does compounding annually or monthly yield more interest?  Explain why </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #85051 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=85051\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> I'LL LET YOU DECIDE WHICH IS THE BEST PLAN BY CALCULATING BOTH THE ANNUAL AND THE MONTHLY COMPOUNDING PLANS.<BR>\n" );
document.write( "FIRST THE ANNUAL PLAN<BR>\n" );
document.write( "A=P(1+R/N)^NT<BR>\n" );
document.write( "A=4,000(1+.07)^8<BR>\n" );
document.write( "A=4,000(1.07)^8<BR>\n" );
document.write( "A=4,000*1.718186<BR>\n" );
document.write( "A=6,872.74 ANSWER FOR ANNUAL COMPOUNDING.<BR>\n" );
document.write( "MONTHLY COMPOUNDING WOULD BE:<BR>\n" );
document.write( "A=4,000(1+.07/12)^12*8<BR>\n" );
document.write( "A=4,000(1+.005833)^96<BR>\n" );
document.write( "A=4,000(1.005833)^96<BR>\n" );
document.write( "A=4,000*1.747771<BR>\n" );
document.write( "A=6,991.08 ANSWER FOR MONTHLY COMPOUNDING. </SPAN>\n" );
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