Question

A woman invests 12,500 in a savings account drawling interest that is compounded annually. Find the annual rate if the money grows to 14,045 in 2 years

Answer 1

6% each year I think

Answer 2

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\dotfill &\ 14045\\ P=\textit{original amount deposited}\dotfill &\ 12500\\ r=rate\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{annually, thus once} \end{array}\dotfill &1\\ t=years\dotfill &2 \end{cases}$

$\bf 14045=12500\left(1+\frac{r}{1}\right)^{1\cdot 2}\implies \cfrac{14045}{12500}=(1+r)^2\implies \cfrac{2809}{2500}=(1+r)^2 \\\\\\ \sqrt{\cfrac{2809}{2500}}=1+r\implies \cfrac{53}{50}=1+r\implies \cfrac{53}{50}-1=r\implies \cfrac{3}{50}=r \\\\\\ 0.06=r\implies \stackrel{\textit{converting it to percent format}}{0.06\cdot 100=r}\implies \stackrel{\%}{6}=r$