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Logan opened a savings account and deposited 201.00. The account earns 7% 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 : 230.93

Solution steps

Translate the problem into an equation:

A = 201 (1 + \frac{0.07}{4})^{4 \cdot 2}

201 (1 + \frac{0.07}{4})^{4 \cdot 2} = 230.92523 \dots

Round to the nearest hundredth:

230.93

Amount : 230.93

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