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

A=P (1+r/n)

A is the amount of returned.

P is the principal amount initially deposited.

r is the annual interest rate (expressed as a decimal).

n is the compound period.

t is the number of years.

Carry all calculations to 6 decimals on all assignments then round the answer to the nearest cent.

Suppose you deposit $10,000 for 2 years at a rate of 10%.

e)What observation can you make about the size of the increase in your return as your compounding increases more frequently?

f) If a bank compounds continuously, then the formula takes a simpler, that is A=PE where e is a constant and equals approximately 2.7183.

Calculate A with continuous compounding.

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For continuos compounding the formula is

A=Pe^rt where r is expressed as a decimal and t time in years

A = 10,000 e^(0.1*2)=10,000*1.221403 =$12,214.03