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The formular r= √A/P- 1 gives the interest rater that will allow principal P to grow into amount A in two years, if the interest is compounded annually. Suppose you have 5425
to deposit into an account. Find the interest rate you would need to have $470 in the account at the end of the second year.

Respuesta :

MrRoyal

The interest rate is 29.43%

How to determine the interest rate?

The given parameters are:

Amount, A = $470

Principal, P = $5425

The formula of rate is given as:

r= √A/P- 1

Substitute known values

r= √470/5425- 1

Evaluate the difference

r= √470/5424

Evaluate the quotient

r= √0.08665

Evaluate the exponent

r= 0.2943

Express as percentage

r = 29.43%

Hence, the interest rate is 29.43%

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