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    return with different compounding period

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    The formula for calculating the amount of money returned for deposit money into a bank account or CD (Certificate of Deposit) is given by the following:

    a) Calculate the return (A) if the bank compounds annually (n = 1).
    b) Calculate the return (A) if the bank compounds quarterly (n = 4). Round your answer to the hundredth's place.
    c) Calculate the return (A) if the bank compounds monthly (n = 12). Round your answer to the hundredth's place.
    d) Calculate the return (A) if the bank compounds daily (n = 365). Round your answer to the hundredth's place.
    e) What observation can you make about the size of increase in your return as your compounding increases more frequently?
    f) If a bank compounds continuous, then the formula becomes simpler, that is
    where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding. Round your answer to the hundredth's place.

    See attached file for full problem description.

    © BrainMass Inc. brainmass.com June 3, 2020, 7:48 pm ad1c9bdddf
    https://brainmass.com/business/interest-rates/return-with-different-compounding-period-112299

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    (e) The return ...

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    The solution explains how to calculate the amount of money returned when the interest is compounded for different compound period or continuously in detail.

    $2.19

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