Question

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

Find the rate at which $9,600 compounded annually grows to $20,184 in 2 years.

Answer 1

Rate = 0.45 or 45%.

Explanation:

20184 = 9600(1 + r)^2

(1 + r)^2 = 20184/9600 = 2.1025

Taking square roots of both sides:

1 + r = 1.45

r = 1.45 - 1 = 0.45.