Problema Solution
The formula A=p(1+t)^2, is used to find the amount of money, A, in an account after P dollars have been invested in the account paying an annual interest rate, r, for 2 years. Find the rate if 500 grows to 1125 in 2 years.
Answer provided by our tutors
r = the annual rate as a decimal
P = $500
A = $1,125
t = 2 years
A = P(1 + r)^t
1125 = 500(1 + r)^2
500(1 + r)^2 = 1125
by solving we find:
r = 0.5 or 50%
click here to see the step by step solution of the equation:
the annual rate is 50%.