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Greg opened a savings account and deposited 200.00. The account earns 1% 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 : 204.04

Solution steps

Translate the problem into an equation:

A = 200 (1 + \frac{0.01}{12})^{12 \cdot 2}

200 (1 + \frac{0.01}{12})^{12 \cdot 2} = 204.03856 \dots

Round to the nearest hundredth:

204.04

Amount : 204.04

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