Question

Use the formula A=P(1+r)" to solve the following problem.

Find the rate r at which $500,000 grows to $708,050 in 2 years.

Answer 1

r= 0.19

Explanation:

A= $708,050

P=$500,000

'' = 2

$708,050= $500,000(1+r)^2

-Divide $500,000 by both sides

1.4161= (1+r)^2

-Square Root on both sides

1.19= 1+r

-Subtract 1 on both sides

r= 0.19