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Jon opened a savings account and deposited 1,461.00. The account earns 9.88% 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

Jon opened a savings account and deposited 1, 461.00. The account earns 9.88% 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 : 1957.99

Solution steps

Translate the problem into an equation:

A = 1461 (1 + \frac{0.0988}{4})^{4 \cdot 3}

1461 (1 + \frac{0.0988}{4})^{4 \cdot 3} = 1957.99261 \dots

Round to the nearest hundredth:

1957.99

Amount : 1957.99

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