Question

Eliana opened a savings account and deposited $300.00. The account earns 13% interest, compounded annually. 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?

Answer 1

• $432.87

Explanation:

Use below compound interest formula and the given data.

• 
  `F = P*(1 + r)^(nt)`

F- future amount, P- invested amount, r - interest rate, n - number of compounds, t- time

Given:

• P = $300
• r = 13% or 0.13
• t = 3 years
• n = 1

Find the amount after 3 years:

• 
  `F = 300(1 + 0.13)^3 = 432.87`