Question

At the end of 2​ years, P dollars invested at an interest rate r compounded annually increases to an​ amount, A​ dollars, given by the following formula. Upper A equals Upper P (1 plus r )squared Find the interest rate if ​$32 increased to ​$50 in 2 years. Write your answer as a percent.

Answer 1

The interest rate will be equal to 24% in 2 years.

What is compound interest?

Compound interest is the interest levied on the interest. The formula for the calculation of compound interest is given as:-

Given that:-

• Find the interest rate if ​$32 increased to ​$50 in 2 years.

The interest rate will be calculated by using the following formula:-

$A = P[1+\dfrac{r}{n}]^{nt}$

$50=32[1+\dfrac{r}{1}]^{2}$

$\dfrac{50}{32}=(1+r)^2$

1.56 = ( 1 + r )²

√1.56 = ( 1 + r )

r = 1.24 - 1

r = 0.24

r = 24%

Therefore  interest rate will be equal to 24% in 2 years.

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