Question 162785
12,000(1+r)^2 = 27,000
12,000(1+2R+R^2)=27,000
12,000+24,000R+12,000R^2=27,000
12,000R^2+24,000R+12,000-27,000=0
12,000R^2+24,000R-15,000=0
3,000(4R^2+8R-5)=0
3,000(2R-1)(2R+5)=0
2R-1=0
2R=1
R=1/2 OR .5 OR 50% ANNUAL RETURN.
PROOF:
12,000(1+.5)^2=27,000
12,000(1.5)^2=27,000
12,000*2.25=27,000
27,000=27,000