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Lara opened a savings account and deposited 200.00. The account earns 1% interest, compounded monthly. 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 : 206.09

Solution steps

Translate the problem into an equation:

A = 200 (1 + \frac{0.01}{12})^{12 \cdot 3}

200 (1 + \frac{0.01}{12})^{12 \cdot 3} = 206.08833 \dots

Round to the nearest hundredth:

206.09

Amount : 206.09

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