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)^

Algebra ->  Customizable Word Problem Solvers  -> Misc -> 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)^      Log On

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Question 208039: 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=27000
Answer by rapaljer(4671) About Me  (Show Source):
You can put this solution on YOUR website!
Divide both sides by 12000
(1+r)^2 = 27000/12000
(1+r)^2=9/4

Take the square root of both sides:
1+r=3/2 or 1+r=-3/2 (reject negative answers!)
r=3/2-1
r=1/2
r=.50 = 50% -- Pretty good investment!!

R^2