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Grayson opened a savings account and deposited 400.00. The account earns 12% 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

Solution

Amount : 572.31

Solution steps

Translate the problem into an equation:

A = 400 (1 + \frac{0.12}{12})^{12 \cdot 3}

400 (1 + \frac{0.12}{12})^{12 \cdot 3} = 572.30751 \dots

Round to the nearest hundredth:

572.31

Amount : 572.31

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