Answer: she will be able to spend $980 on the bike.
Explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1 + r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited
From the information given,
P = $800
r = 7% = 7/100 = 0.07
n = 1 because it was compounded once in a year.
t = 3 years
Therefore,.
A = 800(1 + 0.07/1)^1 × 3
A = 800(1 + 0.07)^3
A = 800(1.07)^3
A = $980