Question

Cindy opened a savings account and deposited 100.00 the account earns 11% interest compounded annually if she wants to use the money to buy a new bicycle in 3 years how much will she able to spend on the bike

Answer 1

Given:

Principal, P = 100.00

Interest Rate, i = 11% = 0.11

Number of years, n = 3

To find the amount she will be able to spend on the bike(after 3 years), use the formula below:

$Amount=P(1+i)^n$

Thus, we have:

$\text{Amount = 100.00(1 + }0.11)^3$$=100(1.11)^3$$\begin{gathered} =\text{ }100(1.367631) \\ \\ =\text{ 136.76} \end{gathered}$

therefore, the amount after 3 years is $136.76

ANSWER:

$136.76