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    Calculate the return if the bank compounds annually

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    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.