# Calculate the return if the bank compounds annually

The formula for calculating the amount of money returned for an intitial deposit into a bank account or CD is given by:

A is the amount of the return

P is the principal amount initially deposited

R is the annual interest rate (expressed in decimal)

T is the number of years

Carry all the calculations to six decimals on each intermediate step,then round the answer to the nearest cent

1. Suppose you deposit $2,000 for 5 years at a rate of 8 percent. Calculate the return (A) if the bank compounds annually (n=1) Round answer to the hundreths place.

2. Calculate the return (A) if the bank compounds quarterly (n=4) Round your answer to the hundredths place.

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#### Solution Preview

A = P (1+ int rate)^# of years

1.) P = $2000

T= 5

r = 8%

A = P (1+ int rate)^# ...

#### Solution Summary

The return of the bank compounds annually are determined.