A is the future amount. R Interest rate annually. N the number of compounding periods each year.
The first pays 4 per year compounded monthly.
A Total Compounded amount with the principal. Thus we get an effective interest rate of 1025 since the compounding makes the CD paying 98 compounded monthly really pay 1025 interest over the course of the year. You decide to invest 6000 for 5 years and have a choice between two accounts. Scroll down the page for more examples and solutions on how to use the compound interest formula.