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Dale opened a savings account and deposited 2,000.00. The account earns 3% 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

Dale opened a savings account and deposited 2, 000.00. The account earns 3% 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 : 2123.51

Solution steps

Translate the problem into an equation:

A = 2000 (1 + \frac{0.03}{12})^{12 \cdot 2}

2000 (1 + \frac{0.03}{12})^{12 \cdot 2} = 2123.51408 \dots

Round to the nearest hundredth:

2123.51

Amount : 2123.51

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