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 decimals on each intermediate step, then round the final answer to the nearest cent.

Suppose you deposit $3,000 for 6 years at a rate of 7%.

a) Calculate the return (A) if the bank compounds semi-annually. Round your answer to the nearest cent.

Answer:

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b) Calculate the return (A) if the bank compounds monthly. Round your answer to the nearest cent.

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c) If a compounds continuously, then the formula used is A=Pe^rt where e is a constant and equals approximately 2.7183. Calculate A with continuous compounding. Round your answer to the nearest cent.

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