Question

The interest rate r required to increase your investment p to the amount a in t years is found by /?f=r%3D%28%5Cfrac%7Ba%7D%7Bp%7D%20%29%5E%5Cfrac%7B1%7D%7Bt%7D%20-1" id="TexFormula1" title="r=(\frac{a}{p} )^\frac{1}{t} -1" alt="r=(\frac{a}{p} )^\frac{1}{t} -1" align="absmiddle" class="latex-formula">. Find the interest rate r for p = 2700, a = 6400, and t = 3. Round to the nearest hundredth.

Answer 1

Answer: $r=0.33\ or\ 33\%$

Step-by-step explanation:

You have the formula shown in the problem to calculate the interest rate required to increase your investment to the amount a in t years:

$r=(\frac{a}{p})^\frac{1}{t}-1$

And you know that:

$p=2700\\a=6400\\t=3$

You must substitute the values shown above, into the formula to solve the problem.

Therefore, you obtain:

$r=(\frac{6400}{2700})^\frac{1}{3}-1\\\\r=0.33\ or\ 33\%$