You collect old model trains. One particular model increases in value at a rate of 6.5% per year. Today, the model is worth $1,670. How much additional money can you make if you wait 4 years to
Sell the model rather than selling it 2 years from now?
A) $196.67
B) $208.04
C) $241.79
D) $254.24
E) $280.15

Question

Quizplus · Accepted Answer

First, we need to calculate the value of the model in two years:

Value in 2 years = $1,670 x (1 + 0.065)^2 = $1,938.66

Next, we need to calculate the value of the model in four years:

Value in 4 years = $1,670 x (1 + 0.065)^4 = $2,194.96

The additional money made by waiting 4 years instead of 2 years is:

$2,194.96 - $1,938.66 = $256.30

The closest answer choice to $256.30 is D) $254.24, which is our answer.

You Collect Old Model Trains