The following tables give the formulas for Simple Interest Compound Interest and Continuously Compounded Interest. So the 1 ultimately comes from the fact that you keep your base amount and not only the smaller interest amount. I would choose option 1.
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Since in this problem the variable is in the exponent logarithms will be used to solve it. However your bank has two different plans. PV FV 1rn Finds the Present Value when you know a Future Value the Interest Rate and number of Periods. Really clear math lessons pre-algebra algebra precalculus cool math games online graphing calculators geometry art fractals polyhedra parents and teachers areas too.