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Popular Word Problems >

Jack and Rita deposit 1,601.00 into a savings account which earns 3.12% interest compounded annually. They want to use the money in the account to go on a trip in 2 years. How much will they be able to spend?

Solution

J a c k an d R i t a d e p os i t 1, 601.00 in t o a s a v in g s a cco u n t w hi c h e a r n s 3.12% in t eres t co m p o u n d e d ann u a ll y . T h ey w an t t o u se t h e m o n ey in t h e a cco u n t t o g o o n a t r i p in 2 ye a rs . Ho w m u c h w i ll t h ey b e ab l e t o s p e n d ?

Solution

Amount : 1702.46

Solution steps

Translate the problem into an equation:

A = 1601 (1 + \frac{0.0312}{1})^{1 \cdot 2}

1601 (1 + \frac{0.0312}{1})^{1 \cdot 2} = 1702.46087 \dots

Round to the nearest hundredth:

1702.46

Amount : 1702.46

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