Problema Solution
The formula A=P (1+r)^2 gives the amount A in dollars that P dollars will grow to in 2 yrs.at interest rate r (where r is given as decimal)using compound interest. What interest rate will cause $4000 to grow to 4326.40 in 2 yrs.?
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The formula A=P (1+r)^2 gives the amount A in dollars that P dollars will grow to in 2 yrs.at interest rate r (where r is given as decimal)using compound interest. What interest rate will cause $4000 to grow to 4326.40 in 2 yrs.?
Solution:
A=P (1+r)^2
4326.40 = 4000*(1+r)^2
r = 0.04 = 4%
So the interest rate is 4%