Question

Miki opened a savings account and deposited $200.00. The account earns 10% interest, compounded continuously. If she wants to use the money to buy a new bicycle in 1 year, how much will she be able to spend on the bike?

Use the formula A=Pert, where A is the balance (final amount), P is the principal (starting amount), e is the base of natural logarithms (≈2.71828), r is the interest rate expressed as a decimal, and t is the time in years.
Round your answer to the nearest cent.
$

Answer 1

A=200(1.10^1) the formula is A=P(r^t ) so I think the answer would be 220 so they would have 220 dollars to spend on a new bike I believe.remember that if the money is increasing you will always put a 1 in front of the percent,if it is decreasing you would do 1-whatever percentage.