Guided Practice
Suppose you have $500 to deposit into an account. Your goal is to have $595 in that account at the end of the second year. The formula r=
- 1 gives the interest rate r that will allow principal P to grow into amount A in two years, if the interest is compounded annually. Use the formula to find the interest rate you would need to meet your goal.
A.
19%
B.
9.1%
C.
8.4%