SOLUTION: 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=

Algebra ->  Polynomials-and-rational-expressions -> SOLUTION: 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=      Log On


   

Question 120321: 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
Answer by checkley71(8403) About Me  (Show Source):
You can put this solution on YOUR website!
12,000(1+r)^2=27,000
12,000(1+2r+r^2)=27,000
12,000+24,000r+12,000r^2-27,000=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 on investment.
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