Aaliyah opened a savings account and deposited 500.00. The account earns 2% interest, compounded quarterly. 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 : 530.84

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.02}{4})^{4 \cdot 3}

500 (1 + \frac{0.02}{4})^{4 \cdot 3} = 530.83890 \dots

Round to the nearest hundredth:

530.84

Amount : 530.84

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