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Lorenzo and Anna deposit 700.00 into a savings account which earns 8% interest compounded monthly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Solution

Amount : 889.17

Solution steps

Translate the problem into an equation:

A = 700 (1 + \frac{0.08}{12})^{12 \cdot 3}

700 (1 + \frac{0.08}{12})^{12 \cdot 3} = 889.16593 \dots

Round to the nearest hundredth:

889.17

Amount : 889.17

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