<PRE><B>Question 1189624</B>
8000 is invested for 6 years at 12% per year.


the formula to use is f = p * (1 + r) ^ n


f is the future value
p is the present value
r is the interest rate per time period.
n is the number of time periods.


when the interest rate is compounded annually, the formula becomes:


f = 8000 * (1 + .12) ^ 6 = 15790.58148.


when the interest rate is compounded monthly, the formula becomes:


f = 8000 * (1 + .12/12) ^ (6*12) = 16736.7945.


what is happening is that the annual interest rate of .12 is divided by 12 to get the monthly interest rate of .12/12 and the number of years is multiplied by 12 to get the number of months = 6*12.


the formula uses the rate, not the percent.
the percent divided by 100 equals the rate.
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