SOLUTION: The fromula A=P(1+r)^t gives the amount A in dollars that P dollars will grow to in two years at interest rate r using compound interest. What interest rate will cause $6235.75 to
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Question 148069: The fromula A=P(1+r)^t gives the amount A in dollars that P dollars will grow to in two years at interest rate r using compound interest. What interest rate will cause $6235.75 to grow to $8612.88 in two years? Round your answers here to the nearest tenth of a percent. Answer by nerdybill(7384) (Show Source):
You can put this solution on YOUR website! The fromula A=P(1+r)^t gives the amount A in dollars that P dollars will grow to in two years at interest rate r using compound interest. What interest rate will cause $6235.75 to grow to $8612.88 in two years? Round your answers here to the nearest tenth of a percent.
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The problem gives a formula of:
A=P(1+r)^t
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It also provides:
P = $6235.75
A = $8612.88
t = 2 years
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Simply plug in the above into the provided formula and solve for unknown (r):
A=P(1+r)^t
8612.88 = 6235.75(1+r)^2
dividing both sides by 6235.75 we get:
1.3812 = (1+r)^2
take the "square root" of both sides to get:
1.1752 = 1+r
subtract 1 from both sides to get:
.1752 = r
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answer: 17.5%
