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Madelyn opened a savings account and deposited 1,000.00. The account earns 6% interest, compounded quarterly. If she wants to use the money to buy a new bicycle in 2 years, how much will she be able to spend on the bike?

Solution

Madelyn opened a savings account and deposited 1, 000.00. The account earns 6% interest, compounded quarterly. If she wants to use the money to buy a new bicycle in 2 years, how much will she be able to spend on the bike?

Solution

Amount : 1126.49

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.06}{4})^{4 \cdot 2}

1000 (1 + \frac{0.06}{4})^{4 \cdot 2} = 1126.49258 \dots

Round to the nearest hundredth:

1126.49

Amount : 1126.49

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