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Sam and Cara deposit 500.00 into a savings account which earns 12% interest compounded monthly. They want to use the money in the account to go on a trip in 3 years. How much will they be able to spend?

Solution

Solution

Amount : 715.38

Solution steps

Translate the problem into an equation:

A = 500 (1 + \frac{0.12}{12})^{12 \cdot 3}

500 (1 + \frac{0.12}{12})^{12 \cdot 3} = 715.38439 \dots

Round to the nearest hundredth:

715.38

Amount : 715.38

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