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Tyler opened a savings account and deposited 3,000.00. The account earns 4% interest, compounded monthly. If he wants to use the money to buy a new bicycle in 3 years, how much will he be able to spend on the bike?

Solution

Tyler opened a savings account and deposited 3, 000.00. The account earns 4% interest, compounded monthly. If he wants to use the money to buy a new bicycle in 3 years, how much will he be able to spend on the bike?

Solution

Amount : 3381.82

Solution steps

Translate the problem into an equation:

A = 3000 (1 + \frac{0.04}{12})^{12 \cdot 3}

3000 (1 + \frac{0.04}{12})^{12 \cdot 3} = 3381.81562 \dots

Round to the nearest hundredth:

3381.82

Amount : 3381.82

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