Question 38411: Need help answering this question please. Have to have it done by tonight.
3) The formula for calculating the amount of money returned for deposit money into a bank account or CD (Certificate of Deposit) is given by the following:
A = P(1+ r over n)^nt
A is the amount of returned
P is the principal amount deposited
r is the annual interest rate (expressed as a decimal)
n is the compound period
t is the number of years
Suppose you deposit $20,000 for 3 years at a rate of 8%.
a) Calculate the return (A) if the bank compounds annually (n = 1).
Answer:
Show work in this space. Use ^ to indicate the power.
b) Calculate the return (A) if the bank compounds quarterly (n = 4), and carry all calculations to 7 significant figures.
Answer:
Show work in this space .
c) Calculate the return (A) if the bank compounds monthly (n = 12), and carry all calculations to 7 significant figures.
Answer:
Show work in this space.
d) Calculate the return (A) if the bank compounds daily (n = 365), and carry all calculations to 7 significant figures.
Answer:
Show work in this space.
e) What observation can you make about the increase in your return as your compounding increases more frequently?
Answer:
f) If a bank compounds continuous, then the formula becomes simpler, that is A=Pe^rt
where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding.
Answer:
Show work in this space
g) Now suppose, instead of knowing t, we know that the bank returned to us $25,000 with the bank compounding continuously. Using logarithms, find how long we left the money in the bank (find t).
Answer:
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h) A commonly asked question is, “How long will it take to double my money?” At 8% interest rate and continuous compounding, what is the answer?
Answer: Show work in this space.
Answer by Nate(3500)   (Show Source):
You can put this solution on YOUR website! 
Suppose you deposit $20,000 for 3 years at a rate of 8%.
a) Calculate the return (A) if the bank compounds annually (n = 1).
b) Calculate the return (A) if the bank compounds quarterly (n = 4)
c) Calculate the return (A) if the bank compounds monthly (n = 12)
d) Calculate the return (A) if the bank compounds daily (n = 365)
e) As the time or interest or frequency of compounded times increases, the amount of total money will increase.
f) If a bank compounds continuous, then the formula becomes simpler, that is 
where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding.
g) Now suppose, instead of knowing t, we know that the bank returned to us $25,000 with the bank compounding continuously. Using logarithms, find how long we left the money in the bank (find t).
In about 2.789294
h) A commonly asked question is, “How long will it take to double my money?” At 8% interest rate and continuous compounding, what is the answer?
In about 8.664340
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