Question

Lee opened a saving account and deposited $700.00. The account earns 2% interest compounded annually if he wats to use the money to buy. New bicycle in 3 years how much will he be able to spend on the bike?

Answer 1

The right solution is "$1001.49".

Explanation:

The given values are:

Deposited amount,

P = $700

Rate if interest,

r = 2%

Time,

t = 3

n = 12

As we know,

⇒
`A = P ( 1 + (r)/(n) )^(nt)`

On putting the given values in the above formula, we get

⇒
`=700 ( 1 + (0.2)/(12) )^(12* 3)`

⇒
`=700 ((12+0.2)/(12) )^(36)`

⇒
`=700((12.2)/(12) )^(36)`

⇒
`=700* (1.01)^(36)`

⇒
`=700* 1.4307`

⇒
`=1001.49` ($)