SOLUTION: The formula A=P(1+r)^2 gives the amount A in dollars that P will grow to in 2 years at interest rate r (where r is given as a decimal), using compound interest. What interest rate

Question 620517: The formula A=P(1+r)^2 gives the amount A in dollars that P will grow to in 2 years at interest rate r (where r is given as a decimal), using compound interest. What interest rate will cause $2000 to grow to $2163.20 in 2 years?
The interest rate is___%?
(type an integer or decimal, Round to the nearest tenth of a percent if needed)
Answer by ewatrrr(24785) (Show Source): You can put this solution on YOUR website!

 

Hi,

What interest rate will cause $2000 to grow to $2163.20 in 2 years?

 2163.20/2000 = (1 + r)^2

1.0816 = (1+r)^2  |taking the square root of both sides of the EQ     

 1.04 = (1+ r)    

   .04 = r   or r = 4% interest 

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