Question

You are saving money to buy a used car. You deposit $2,500 in an account that earns interest compounded annually. The expression 2500(1+r)^2 represents the balance after 2 years, where r is the annual interest rate in decimal form

Answer 1

`r= [((A)/(2500)) ^(1)/(2) -1]`

Explanation:

Given data

Principal = $2500

time t= 2 years

Required

the rate r

Given the expression for the balance 2500(1+r)^2

Hence

`A= 2500(1+r)^2`

we can make r subject of formula

`r= [((A)/(P)) ^(1)/(t) -1]`

`r= [((A)/(2500)) ^(1)/(2) -1]`

Hence, for any value of A, we can find the rate using the expression above