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Jasper opened a savings account and deposited 200.00 the account earns 9%interest compounded annually if he wants to use the money to buy a new bicycle in 2 years how much will he able to spend on the bike

User Hyunyoung
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1 Answer

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The formula for calculating the amount of money after compounding for a period of time is expressed as;

A = P(1+r/n)^nt

P is the principal (amount deposited)

r is the rate

t is the time

n is the time of compounding

Given

P = 200.00

r = 9% = 0.09

t = 2 years

n = 1 year

Substitute the given parameters into the formula

A = 200(1+0.09/1)^1(2)

A = 200(1.09)^2

A = 200(1.1881)

A = 237.62

Hence he will be able to spend 237.62 on the bike

User Yannis Dran
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