Question

in 2 years Jordan wants to buy a bicycle that costs 800.00 if he opens a savings account that earns 6% interest compounded monthly how much will he have to despoit as principal to have enough money in 2 years to buy the bike

Answer 1

$\begin{gathered} P=\frac{A}{(1+\frac{r}{n})^{nt}} \\ P=\text{?} \\ A=800 \\ r=\text{ 6\%=}\frac{6}{100}=0.06 \\ t=2 \\ P=\frac{800}{(1+\frac{0.06}{12})^{12\times2}} \\ P=\frac{800}{1.12715977621} \\ P=\text{ \ }709.748535113 \\ P=\text{ \ }709.75 \end{gathered}$