SOLUTION: I have a question that I am having trouble with. It is about venture capital. A man invested 12,000 in a new restaurant when the restaurant was sold 2 yearS later he received 27,

Algebra ->  Quadratic Equations and Parabolas -> SOLUTION: I have a question that I am having trouble with. It is about venture capital. A man invested 12,000 in a new restaurant when the restaurant was sold 2 yearS later he received 27,      Log On


   

Question 190795: I have a question that I am having trouble with.
It is about venture capital. A man invested 12,000 in a new restaurant when the restaurant was sold 2 yearS later he received 27,000. I am to find the average annual return by solving the equation 12,000(i+r)^2=27,000

I have subtracted 12000 from each side giving me r^2=15000. This does not seems right. Am I on the right track? Can you please help?
Answer by solver91311(24713) About Me  (Show Source):
You can put this solution on YOUR website!

First let's make sure that you have the correct formula. You typed:



Whereas the correct formula for this problem is:



Either way, subtracting 12,000 from both sides is incorrect. You need to divide both sides by 12,000, thus:



Then reduce the fraction:



Now take the square root of both sides:



Finally add -1 to both sides:



A mighty fine investment indeed.


John