SOLUTION: A business invests $8,000 in a savings account for two years. At the beginning of the second year, an additional $2,500 is invested. At the end of the second year, the account ba

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: A business invests $8,000 in a savings account for two years. At the beginning of the second year, an additional $2,500 is invested. At the end of the second year, the account ba      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 179408: A business invests $8,000 in a savings account for two years. At the beginning of the second year, an additional $2,500 is invested. At the end of the second year, the account balance is $11,445. What was the annual interest rate?
Answer by MissionPossible(18) About Me  (Show Source):
You can put this solution on YOUR website!
the annual interest rate = r
$8,000 in a savings account for two years.--> 8000*(1+r)^2
beginning of the second year, an additional $2,500 is invested-->2500*(100+r)
8000*(1+r)^2 + 2500*(1+r) = 11,445
suppose 100+r = A
8000*A^2 + 2500*A = 11,445
8000*A^2 + 2500*A - 11,445 = 0
A = 1.05
r = 0.05 or 5 % Ans.