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Colin opened a savings account and deposited 1,000.00. The account earns 8% interest, compounded quarterly. 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

Colin opened a savings account and deposited 1, 000.00. The account earns 8% interest, compounded quarterly. 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

Amount : 1268.24

Solution steps

Translate the problem into an equation:

A = 1000 (1 + \frac{0.08}{4})^{4 \cdot 3}

1000 (1 + \frac{0.08}{4})^{4 \cdot 3} = 1268.24179 \dots

Round to the nearest hundredth:

1268.24

Amount : 1268.24

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