Question

in 3 years Layla wants to buy a new bicycle that costs 700.00 if she opens a savings account that earns 13%interest compounded quarterly how much will she have to despoit as principal to have enough money in 3 years to buy the bike

Answer 1

We will replace in the following equation:

$A=P(1+\frac{r}{n})^{nt}$

We replace as follows:

$700=P(1+\frac{0.13}{3})^{(3)(3)}\Rightarrow P\approx477.85$

She would have to deposit approximately $477.85.