SOLUTION: Henry invested $12000 in a new restaurant. When the retaurant was sold two years later, he received $27000. find his average annual return by solving the equation 12000(1+r)^2=$270

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Question 181976: Henry invested $12000 in a new restaurant. When the retaurant was sold two years later, he received $27000. find his average annual return by solving the equation 12000(1+r)^2=$27000
Found 2 solutions by Earlsdon, checkley77:
Answer by Earlsdon(6294) About Me  (Show Source):
You can put this solution on YOUR website!
You want to find the value of r (interest rate or rate of return).
12000%281%2Br%29%5E2+=+27000 Divide both sides by 12000
%281%2Br%29%5E2+=+27000%2F12000 Simplify the right side.
%281%2Br%29%5E2+=+9%2F4 Now take the square root of both sides.
sqrt%28%281%2Br%29%5E2%29+=+sqrt%289%2F4%29
1%2Br+=+3%2F2 Subtract 1 from both sides.
r+=+1%2F2
highlight%28r+=+0.5%29
The average annual rate of return is 50%

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+r)^2=27,000
(1+r)^2=27,000/12,000
(1+r)^2=15,000
(1+r)^2=2.25
1+r=sqrt2.25
1+r=1.5
r=1.5-1
r=.5 or 50% was the 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