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Shelley opened a savings account and deposited 500.00. The account earns 11% interest, compounded quarterly. If she wants to use the money to buy a new bicycle in 3 years, how much will she be able to spend on the bike?

Solution

Solution

Amount : 692.39

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.11}{4})^{4 \cdot 3}

500 (1 + \frac{0.11}{4})^{4 \cdot 3} = 692.39188 \dots

Round to the nearest hundredth:

692.39

Amount : 692.39

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