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Joel opened a savings account and deposited 2,411.00. The account earns 4% interest, compounded monthly. If he wants to use the money to buy a new bicycle in 2 years, how much will he be able to spend on the bike?

Solution

Joel opened a savings account and deposited 2, 411.00. The account earns 4% interest, compounded monthly. If he wants to use the money to buy a new bicycle in 2 years, how much will he be able to spend on the bike?

Solution

Amount : 2611.46

Solution steps

Translate the problem into an equation:

A = 2411 (1 + \frac{0.04}{12})^{12 \cdot 2}

2411 (1 + \frac{0.04}{12})^{12 \cdot 2} = 2611.45767 \dots

Round to the nearest hundredth:

2611.46

Amount : 2611.46

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