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

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Question 160580: 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 checkley77(12844) 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
r^2+2r+1=27,0000/12,000
r^2+2r+1=2.25
r^2=2r+1-2.25=0
r^2+2r-1.25=0
(r-.5)(r+2.5)=0
r=.5 or 50% annual return.
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