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Henry opened a savings account and deposited 558.00. The account earns 7% 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

Solution

Amount : 687.14

Solution steps

Translate the problem into an equation:

A = 558 (1 + \frac{0.07}{4})^{4 \cdot 3}

558 (1 + \frac{0.07}{4})^{4 \cdot 3} = 687.14313 \dots

Round to the nearest hundredth:

687.14

Amount : 687.14

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