Question 1170325: Formulate a quadratic equation then answer what is asked in the problem.
If John plans to put a Computer Sales and Services with printing station and applies for a loan of an amount P in pesos and r percent compounded annually to invest in his business, he believes that his business will grow to an amount A=P(1+r)² in two years. Supposed John wants his money amounting to Php200,000 to grow to Php228,980 in two years. At what rate must he invest his money?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the formula to use if f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period
n is the number of time period.
in your problem, the formula becomes:
228,980 = 200,000 * (1 + r) ^ 2
divide both sides of the equation by 200,000 and take the second root of both sides of the equation and subtract 1 from both sides of the equation, in that order, to get:
(228,980/200,000) ^ (1/2) - 1 = r
solve for r to get:
r = .07
he must invest 200,000 at 7% per year, compounded annually, to have 228,980 in 2 years.
200,000 * (1.07) ^ 2 = 228,980.
7% per year is your answer.
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