SOLUTION: Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equ

Algebra ->  Polynomials-and-rational-expressions -> SOLUTION: Venture capital. Henry invested $12,000 in a new restaurant. When the restaurant was sold two years later, he received $27,000. Find his average annual return by solving the equ      Log On


   

Question 223299: Venture capital. Henry invested $12,000 in a new
restaurant. When the restaurant was sold two years
later, he received $27,000. Find his average annual
return by solving the equation 12,000(1 + r)2 =
27,000. (The 2 is a 'to the power number)
Please help how do I figure this out?? Do I simply add 12,000 and 27,000 then divide by 2?? Maybe?
Answer by checkley77(12844) About Me  (Show Source):
You can put this solution on YOUR website!
12,000(1+R)^2=27,000
(1+R)^2=27,000/12,000
(1+R)^2=2.25
1+R=SQRT2.25
1+R=1.5
R=1.5-1
R=.5 OR 50% IS THE INTEREST RATE.
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