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July 29, 2014

July 29, 2014

Posted by **Ruth** on Thursday, February 2, 2012 at 11:25pm.

bank account or CD (certificate of deposit) is given by

nt

n

r

P A „Ê„Ë

„É

„º„»

„¹

ƒ 1ƒy

A is the amount of the return.

P is the principal amount initially deposited.

r is the annual interest rate (expressed as a decimal).

n is the number of compound periods in one year.

t is the number of years.

Carry all calculations to six decimal places on each intermediate step, then round the

final answer to the nearest whole cent.

Suppose you deposit $2,000 for 5 years at a rate of 8%.

a) Calculate the return (A) if the bank compounds annually (n = 1). Round your

answer to the nearest whole cent.

- algebra -
**Steve**, Friday, February 3, 2012 at 11:35amUsing more conventional online notation,

A = P(1+r/n)^nt

A = 2000(1.08)^5 = 2000*1.469328 = 2938.656 or 2938.66

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