Erica opened a savings account and deposited 2,000.00. The account earns 12% interest, compounded annually. 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

Erica opened a savings account and deposited 2, 000.00. The account earns 12% interest, compounded annually. 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 : 2508.8

Solution steps

Translate the problem into an equation:

A = 2000 (1 + \frac{0.12}{1})^{1 \cdot 2}

2000 (1 + \frac{0.12}{1})^{1 \cdot 2} = 2508.8

Amount : 2508.8

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