Question 53224: I have a homework assignment that I am having a hard time solving. I think I have the right answer. But I'm not sure. The question is:
The formula for calculating the amount of money returned for an initial deposit money into a bank account or CD (Certificate of Deposit) is given by
A=P(1+r/n)^nt
A is the amount of returned.
P is the principal amount initially 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 $10,000 for 2 years at a rate of 10%.
Calculate the return (A) if the bank compounds annually (n = 1). Round your answer to the hundredth's place.
For that problem I did:
A= $10,000(1+.10/2)^2*.10
A=$10,000(1+.05)^2*.10
A=$10,000(1.05)^2*.10
A=$10,000(1.05)^.2
A=$10,000(1.009805798)
A=$10,098.05798
Did I do it right?
Found 2 solutions by rapaljer, Nate:
Answer by rapaljer(4671)   (Show Source):
You can put this solution on YOUR website! NO! I think you have some numbers wrong in this. The value of n is the number of times per year that the compounding occurs, and t is the number of years. This means that the "nt" that is the exponent of the total quantity is actually the total number of periods for the compounding of the interest. In this case, n= 1 and t = 2, so nt=2
A=P(1+r/n)^nt
A is the amount of returned.
P is the principal amount initially 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 $10,000 for 2 years at a rate of 10%.
Calculate the return (A) if the bank compounds annually (n = 1). Round your answer to the hundredth's place.
For that problem I did:
A= $10,000(1+.10/1)^2*1
A=$10,000(1.10)^2
A=$10,000(1.21)
A=$121,000
That's what I got!
R^2 at SCC
Answer by Nate(3500)  (Show Source):
You can put this solution on YOUR website! I know what you are doing wrong. To help you finish this out correctly, you should find the variables first. This way, you do not accidentally plug in the wrong numbers.
n = 1
t = 2
P = 10000
r = 0.1
A = P(1 + r/n)^(tn)
A = 10000(1 + 0.1/1)^(2*1)
A = 10000(1.1)^(2)
A = $12,100
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