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Sagot :
Let's first list down the information given in the scenario:
a.) In 2 years ariel wants to buy a bicycle that costs 1,000.00
b.) She opens a savings account that earns 9% interest compounded quarterly
Question: How much will she have to deposit as principal to have enough money in 2 years to buy the bike?
To be able to determine the principal amount Ariel will need to deposit, let's use this formula for Compound Interest:
[tex]\text{ A = }P(1\text{ + }\frac{\frac{r}{n}}{100})^{nt}[/tex]Where:
A = Is the final amount/ cost of the bicycle = 1,000
n = Number of times the interest is being compounded = 4
r = Interest rate = 9%
t = No. of periods elapsed/ No. years the principal money be deposited
P = Principal amount/ amount to be deposited
Let's now find the principal amount:
[tex]\text{ A = }P(1\text{ + }\frac{\frac{4}{n}}{100})^{nt}\text{ }\rightarrow\text{ 1,000 = }P(1\text{ + }\frac{\frac{9}{4}}{100})^{4(2)}[/tex][tex]\text{1,000 = }P(1\text{ + }\frac{2.25}{100})^8\text{ }\rightarrow\text{ 1,000 = }P(1\text{ + }0.0225)^8\text{ }\rightarrow1,000=P(1.0225)^8[/tex][tex]\text{ P = }\frac{1,000}{(1.0225)^8}\rightarrow\text{ P = }\frac{1,000}{1.19483114181}[/tex][tex]\text{ P = 836.93835 }\cong\text{ 836.94}[/tex]Therefore, Ariel must deposit a principal amount of 836.94 for her to be able to buy the bike in 2 years.
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