SOLUTION: Alexander deposited some money into an account with a fixed rate of interest, compounded annually. The growth of the investment is shown in the table to the right. What is the ann

Question 1105336: Alexander deposited some money into an account with a fixed rate of interest, compounded annually. The growth of the investment is shown in the table to the right.
What is the annual rate of interest, to the nearest percent? What principal did Alexander invest?
End of Year Value of Investment ($)
1 517.50
2 535.61
3 554.36

Answer by ankor@dixie-net.com(22740) (Show Source): You can put this solution on YOUR website!
Alexander deposited some money into an account with a fixed rate of interest, compounded annually. The growth of the investment is shown in the table to the right.
What is the annual rate of interest, to the nearest percent? What principal did Alexander invest?
End of Year Value of Investment ($)
1 517.50
2 535.61
3 554.36
:
let r = interest rate in decimal form + 1
let x = principal, amt invested
:
Write a equation for the first two years
x*r^1 = 517.5
r =
and
x*r^2 = 535.61
r^2 =
r =
:
r=r so we can write an equation we can graph
- = 0
:

we can see x = 500, the principle
:
Find r
r =
r = 1.035, the interest rate is 3.5%
:
Check this in the 3rd year equation
500(1.035)^3 =
500 * 1.1087 = 554.36
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