The formula to find the amount in an account, A, that has an interest rate, r, that compounds n times per year and has a starting balance of P after t years is .
If the interest is compounded yearly, then n = 1 and the interest rate, r, represents the annual interest. When the interest is compounded monthly, then n = 12 but r is still the annual interest.
a. If you were given the equation , how often is the interest compounded?

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\[\large A=P(1+\frac{r}{n})^{nt}\]
where r is expressed as a decimal.

a) The question states that the interest rate compounds n times per year.

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