Answer:
4%
Explanation:
To calculate the annual interest rate (r), you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the final amount (in this case, $1080)
P is the principal amount (in this case, $1000)
r is the annual interest rate (what we want to find)
n is the number of times interest is compounded per year (assuming it's compounded annually, so n = 1)
t is the time in years (in this case, 2 years)
Plugging in the known values:
$1080 = $1000(1 + r/1)^(1*2)
Now, let's isolate the variable r:
$1080/$1000 = (1 + r)^2
Divide both sides by $1000:
1.08 = (1 + r)^2
Now, take the square root of both sides:
√1.08 = 1 + r
1.04 = 1 + r
Subtract 1 from both sides to solve for r:
r = 1.04 - 1
r = 0.04
Now, multiply by 100 to express it as a percentage:
r = 0.04 * 100
r = 4%
So, the annual interest rate is 4%.