To find this, you just need to plug it in and use some algebra to figure it out.
Initial:   2700 = 2200(1 + r)5
multiply 2200 and 5:    2700 = 11000(1 + r)
Divide both sides by 11000: .24 = 1 + r
subtract both sides by 1: -.754 = r

The problem is, a negative interest rate makes no sense if there was actually an increase of 500. We can try distributing the 11000 instead
Where we left off:    2700 = 11000(1 + r)
Distribute the 11000: 2700 = 11000 + 11000r
Subtract 11000 from both sides: -8300 = 11000r
Divide both sides by 11000: -.754 = r

As you can see, both methods reached the same impossible answer. I'm assuming that you didn't type out the equation right. Are you sure it wasn't
2700 = 2200(1 - r)5
? If you subtract the r to make it negative, it might make more sense. But that still leaves us with a .754 rate of interest, which seems too high. Double check where you're typing from

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3 years ago