Megan opened a savings account and deposited 1,331.00. The account earns 1% interest, compounded quarterly. If she wants to use the money to buy a new bicycle in 3 years, how much will she be able to spend on the bike?

Solution

Megan opened a savings account and deposited 1, 331.00. The account earns 1% interest, compounded quarterly. If she wants to use the money to buy a new bicycle in 3 years, how much will she be able to spend on the bike?

Solution

Amount : 1371.48

Solution steps

Translate the problem into an equation:

A = 1331 (1 + \frac{0.01}{4})^{4 \cdot 3}

1331 (1 + \frac{0.01}{4})^{4 \cdot 3} = 1371.48363 \dots

Round to the nearest hundredth:

1371.48

Amount : 1371.48

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