SOLUTION: Let’s use our knowledge of quadratic equations to analyze a real world business application. If P dollars is invested at r rate of interest compounded anually t years, then the amo
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Question 564029: Let’s use our knowledge of quadratic equations to analyze a real world business application. If P dollars is invested at r rate of interest compounded anually t years, then the amount of money, A, accumulated at the end of t years is given by the formula
A = P (1 + r)t
Barbara invested $150 at a certain rate of interest compounded anually for two years. If the accumulated value at the end of two years is $175, find the rate of interest.
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
A = P (1 + r)t
Barbara invested $150 at a certain rate of interest compounded anually for two years. If the accumulated value at the end of two years is $175, find the rate of interest.
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175 = 150(1 + r)^2
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(1 + r)^2 = 7/6
----
1 + r = sqrt(7/6)
r = sqrt(7/6) - 1
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r = 0.0801 = 8.01%
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Cheers,
Stan H.
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