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Rachel opened a savings account and deposited 600.00. The account earns 8% interest, compounded quarterly. 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

Solution

Amount : 703

Solution steps

Translate the problem into an equation:

A = 600 (1 + \frac{0.08}{4})^{4 \cdot 2}

600 (1 + \frac{0.08}{4})^{4 \cdot 2} = 702.99562 \dots

Round to the nearest hundredth:

703

Amount : 703

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