SOLUTION: $600 invested for two years will earn $264 in interest. Find the accumulated value of $200 invested at the same rate of compound interest for three years.

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Question 1133487: $600 invested for two years will earn $264 in interest. Find the accumulated value of $200 invested at the same rate of compound interest for three years.
Answer by greenestamps(13200) About Me  (Show Source):
You can put this solution on YOUR website!


The way the question is worded, it seems to imply the $264 interest is simple interest, not compound interest.

The simple interest for 2 years is $264; the simple interest for 1 year is $132.

$132 interest on a $600 investment means an interest rate of (132/600)*100 = 22%.

The value of $200 at 22% interest compounded annually for three years is

200%281.22%29%5E3

The amount of interest is that value, minus the original $200.

You can do the calculations.