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17 June, 11:57

When "P" Dollars is invested at interest rate "i", compounded annually, for "t" tears, the investment grows to "A" dollars, where A=P (1+i) ^t. When Sara enters 11th grade, her grandparents deposit $10,000 in a college savings account. Find the interest rate "i", if the $10,000 grows to $11,193.64 in two years.

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  1. 17 June, 12:24
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    The interest rate is 0.58, or 58 percent.

    11,193.64 = 10,000 (1 + i) ^2

    Divide each side by 10,000.

    1.119364 = (1 + i) ^2

    Take the square root of both sides.

    1.058 = 1 + i

    Subtract 1

    i = 0.58
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