## At the end of 2​ years, P dollars invested at an interest rate r compounded annually increases to an​ amount, A​ dollars, given by the follo

Question

At the end of 2​ years, P dollars invested at an interest rate r compounded annually increases to an​ amount, A​ dollars, given by the following formula. Upper A equals Upper P (1 plus r )squared Find the interest rate if ​$100 increased to ​$196 in 2 years. Write your answer as a percent.

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1 week 2022-01-07T06:55:43+00:00 1 Answer 0 views 0

## Answers ( )

40%.

Step-by-step explanation:

We have been given that an amount of $100 compounded annually is increased to ​$196 in 2 years. We are asked to find the interest rate.

We will use compound interest formula to solve our given problem.

, where,

A = Final amount,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years.

Upon substituting our given values in above formula, we will get:

Take positive square root of both sides:

Since interest rate is in decimal, form, so we will convert it into percentage as:

Therefore, the interest rate was 40%.