Question

If you invest 2,000 today in a bank that gives you a 4 percent annual interest rate, which of these items can you buy in seven years?
A: a home theater system worth $3,000
B: a designer dress worth $2,700
C: a mountain bike worth $2,500

Answer 1

I=prt
i=2000 X .04 X 7
i = 560
So you earned 560 after 7 years, plus your 2000 you started with
You can get C

Answer 2

The answer is C

$2,000
4% annual rate means $80/year 
$80 x 7 years = $560

$560 + $2,000 = $2,560 

And you can buy just the mountain bike.