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Mason opened a savings account and deposited 400.00. The account earns 9% interest, compounded quarterly. If he wants to use the money to buy a new bicycle in 2 years, how much will he be able to spend on the bike?

Solution

Solution

Amount : 477.93

Solution steps

Translate the problem into an equation:

A = 400 (1 + \frac{0.09}{4})^{4 \cdot 2}

400 (1 + \frac{0.09}{4})^{4 \cdot 2} = 477.93245 \dots

Round to the nearest hundredth:

477.93

Amount : 477.93

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