Posted by Ruth on Thursday, February 2, 2012 at 11:25pm.
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
P A „Ê„Ë
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.
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