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7 July, 15:47

Nina opened a savings account and deposited $300.00. The account earns 4% interest, compounded monthly. If she wants to use the money to buy a new bicycle in 3 years, how much will she be able to spend on the bike?

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  1. 7 July, 16:30
    0
    up to $338.18

    Step-by-step explanation:

    Use the compound amount formula:

    A = P (1 + r/n) ^ (n*t), where r is the interest rate as a decimal fraction and n is the number of compounding periods per year.

    Here, A = $300 (1 + 0.04/12) ^ (12*3), or

    A = $300 (1.0033333) ^*36, or

    A = $300 (1.127) = $338.18

    Nina will be able to spend up to $338.18 on a new bike.
  2. 7 July, 16:46
    0
    Turn 4% into a decimal by dividing it by 100

    4/100=0.04

    0.04times300=$12 in interest

    12months times 3yrs=36 months

    36times$12=$432

    nina will be able to spend $432 on the bike
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