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Wyatt opened a savings account and deposited 500.00. The account earns 6% interest, compounded monthly. 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 : 563.58

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.06}{12})^{12 \cdot 2}

500 (1 + \frac{0.06}{12})^{12 \cdot 2} = 563.57988 \dots

Round to the nearest hundredth:

563.58

Amount : 563.58

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