Question

Tin

Use the compound interest formula A=P(1+0) to find the annual interest rate, r. if in 2 years an investment of $4,000 gros to $4,840.
The rate is
%.
TEH​

Answer 1

10%

Explanation:

The appropriate formula for the future value of an account with compound interest is ...

A = P(1 +r)^t

where r is the annual rate, and t is the number of years.

Fill in the given values and solve for r:

4840 = 4000(1 +r)^2

4840/4000 = (1 +r)^2

√1.21 = 1 +r

1.1 = 1 +r

r = 1.1 -1 = 0.10

r = 10%

The rate is 10%.