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Cody and Mandy deposit 800.00 into a savings account which earns 5% interest compounded monthly. They want to use the money in the account to go on a trip in 2 years. How much will they be able to spend?Round your answer to the nearest cent.

Solution

Solution

Amount : 883.95

Solution steps

Translate the problem into an equation:

A = 800 (1 + \frac{0.05}{12})^{12 \cdot 2}

800 (1 + \frac{0.05}{12})^{12 \cdot 2} = 883.95306 \dots

Round to the nearest hundredth:

883.95

Amount : 883.95

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