Question

The interest rate r required to increase your investment p to the amount a in t years is found by . Find the interest rate r for p = 8100, a = 10,000, and t = 2. Round to the nearest hundredth.

Answer 1

Answer:

The interest rate was of 0.1173 = 11.73%.

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

$A = E + P$

In this problem, we have that:

$A = 10000, P = 8100, t = 2$

So

$A = E + P$

$10000 = E + 8100$

$E = 1900$

So

$1900 = 8100*I*2$

$I = \frac{1900}{8100*2}$

$I = 0.1173$

The interest rate was of 0.1173 = 11.73%.