Question

Nikita invests $2,000 into a bank account with a 4% annual interest rate. In seven years, which is the most expensive item she could afford to buy? A. a home theater system priced at $3,000 B. a beach vacation priced at $2,200 C. a sectional sofa priced at $2,700 D. a mountain bike priced at $2,500

Answer 1

(D) A mountain bike

Explanation:

Principal amount = $2000

Interest rate = 4%

Time (t) = 7 years

So, interest after 7 years (I) =
`(P* R*\ t)/(100)`

=
`(2000 * 4 * 7)/(100)`

= $560

Total amount = 2000+560

= $2560

So, he can afford anything whose price is under $2560.

Most expensive item she could afford to buy is a mountain bike priced at $2500.