Question

If P dollars are invested today at an annual interest rater compounded once a year, then the value of the account A after 2 years is given by the formula A - P(1 + r)? Find the rate of interest required

to turn an investment of $1900 into $2200 after 2 years
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Answer 1

9514 1404 393

Answer:

about 7.61%

Explanation:

Put the given numbers into the formula and solve for r.

2200 = 1900(1 +r)^2

√(22/19) = 1 +r

r = √(22/19) -1 ≈ 0.076055 ≈ 7.61%