What steps should I take to get to the answer to this equation?
The formula for calculating the amount of money returned for an initial deposit in a bank account or CD (Certificate of Deposit) is given by A = P (1 + r / n) ^ nt A is the amount of refund. P is the amount of initial capital deposited. r is the annual interest rate (expressed as a decimal). n is the number of compound periods in a year. t is the number of years. Perform all calculations to six decimals on each intermediate step, then round the final answer to the nearest cent. Suppose you deposit $ 3,000 for nine years at a rate 6%. Calculate the return (A) if the bank compounds annually (n = 1). Round your answer to the hundredth place. Calculate the return (A) if the bank compounds quarterly (N = 4). Round your answer to the hundredth place.
I have not got my calculator on me, but this is what connects in. .. 1. Plug P = 3.000, r = 0.06, t = 9 and n = 1 A = 3000 (1 + 0.06 / 1) ^ (a) (9) = 3000 (1 + 0.06) ^ 9 2. Same as # 1 but is connected n = 4 A = 3000 (1 + 0.06 / 4) ^ (4) (9) = 3000 (1 + .015) ^ 36 I hope this helps! Please email anytime for further questions.
Money Management : How Do Certificates of Deposits Work?