Question

If you invest $1,500 today in a bank that gives you a 5 percent annual interest rate, which of these items can you buy in two years? electronics worth $1,650 fitness equipment worth $1,700 a holiday package worth $2,000

Answer 1

A=1,500×(1+0.05×2)
A=1,650

Answer 2

After 2 years you can buy electronics worth $1,650.

Explanation:

If you invest $1,500 today in a bank, that gives 5% annual interest rate, What amount you receive after 2 years?

Principal amount = $1,500

Interest rate = 5%

Formula for simple interest :

A = P(1+rt)

r = rate of interest

t = time

Now we put the values

A = 1500 (1 + 0.05 × 2)

A = 1500 (1.1) = 1500 × 1.1 = $1,650

After 2 years you can buy electronics worth $1,650.