Jacob opened a savings account and deposited 700.00. The account earns 2% interest, compounded annually. If he wants to use the money to buy a new bicycle in 3 years, how much will he be able to spend on the bike?

Solution

Solution

Amount : 742.85

Solution steps

Translate the problem into an equation:

A = 700 (1 + \frac{0.02}{1})^{1 \cdot 3}

700 (1 + \frac{0.02}{1})^{1 \cdot 3} = 742.8456

Round to the nearest hundredth:

742.85

Amount : 742.85

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