SOLUTION: Barbara invested $100 at a certain rate of interest compounded anually for two years. If the accumulated value at the end of two years is $121, find the rate of interest.
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Question 435857: Barbara invested $100 at a certain rate of interest compounded anually for two years. If the accumulated value at the end of two years is $121, find the rate of interest. Answer by htmentor(1343) (Show Source):
You can put this solution on YOUR website! The interest formula can be written:
P = Po(1+r)^n
In this case n=2, Po=100, P=121
Put in the numbers and solve for r:
121 = 100(1+r)^2
sqrt(121/100) = 1+r -> r = 0.1
Therefore the interest rate was 10%
