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tiny-mole [99]
3 years ago
12

In 2 years, Duncan wants to buy a bicycle that costs $400.00. If he opens a savings account that earns 11% interest compounded a

nnually, how much will he have to deposit as principal to have enough money in 2 years to buy the bike?
Mathematics
1 answer:
ki77a [65]3 years ago
3 0

Answer:

Current deposit amount  = $324.65 (Approx.)

Step-by-step explanation:

Given:

Cost of bicycle = $400

Future amount = $400

Rate of interest = 11% = 0.11

Number of year = 2 year

Find:

Current deposit amount

Computation:

Compound interest formula

A = P[1+r]ⁿ

Future amount = Current deposit[1+Rate of interest]ⁿ

400 = Current deposit[1+0.11]²

400 = Current deposit[1.11]²

400 = Current deposit[1.2321]

Current deposit amount  = 400 /1.2321

Current deposit amount  = $324.65 (Approx.)

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