Question

The interest rate r required to increase your investment p to the amount a in t years is found by . Find the interest rate r for p = 8100, a = 10,000, and t = 2. Round to the nearest hundredth.

Answer 1

The interest rate was of 0.1173 = 11.73%.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

`A = E + P`

In this problem, we have that:

`A = 10000, P = 8100, t = 2`

So

`A = E + P`

`10000 = E + 8100`

`E = 1900`

So

`1900 = 8100*I*2`

`I = (1900)/(8100*2)`

`I = 0.1173`

The interest rate was of 0.1173 = 11.73%.