SOLUTION: If an amount of money, called the principal, P, is deposited into an account that earns interest at a rate R, compound annually, then in 2 years that investments will grow to an a

Question 1091864: If an amount of money, called the principal, P, is deposited into an account that earns interest at a rate R, compound annually, then in 2 years that investments will grow to an amount A, given the formula A= P(1+r)^2. If a principal amount of $5000 grows to $6384.50 in two years, what is the interest rate?
Answer by ankor@dixie-net.com(22740) (Show Source): You can put this solution on YOUR website!
If an amount of money, called the principal, P, is deposited into an account that earns interest at a rate R, compound annually, then in 2 years that investments will grow to an amount A, given the formula A= P(1+r)^2.
If a principal amount of $5000 grows to $6384.50 in two years, what is the interest rate?
:
The equation.
5000*(1+r)^2 = 6384.50
(1+r)^2 =
(1+r)^2 = 1.2769
Find square root of both sides
1 + r =
1 + r = 1.13
r = 1.13 - 1
r = .13; 13% is the interest rate

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