SOLUTION: If an amount of P in pesos is invested at r percentage compunded anually to an amount of A= P (1 + r)^t in two years. Suppose miss madrigal wants her money amounting to Php 200,000

Question 884226: If an amount of P in pesos is invested at r percentage compunded anually to an amount of A= P (1 + r)^t in two years. Suppose miss madrigal wants her money amounting to Php 200,000 to grow to Php 228,980 in 2 years. At what rate must she invest her money?
A= P(1+ r)^t
Where
P - original investment
r- interest per compound period
t - number of periods
A= amount of money at the end
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
start with the equation of:

A = P * (1+r)^t

replace A with 228980 and replace P with 200000 and replace t with 2 to get:

228980 = 200000 * (1+r)^2

divide both sides of the equation by 200000 to get:

228980 / 200000 = (1+r)^2

take the square root of both sides of the equation to get:

(228980 / 200000) ^ (1/2) = 1 + r

subtract 1 from both sides of the equation to get:

(228980 / 200000) ^ (1/2) - 1 = r

simplify to get:

r = .07

that's your answer.

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