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

Solution

Solution

Amount : 743.23

Solution steps

Translate the problem into an equation:

A = 700 (1 + \frac{0.03}{12})^{12 \cdot 2}

700 (1 + \frac{0.03}{12})^{12 \cdot 2} = 743.22993 \dots

Round to the nearest hundredth:

743.23

Amount : 743.23

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