The future vale of $5000 invested for 4 years at the rate of r compounded annually is given by S=5000(1+r)^4

Question

The future value of $5000 invested for 4 years at the rate of R compounded annually is given by S=5000(1+r)^4.

A. Use the root method to find the rate r, as a percent, for which the future value is $10,368.

B. What rate as a percent gives $2320.50 in interest on this investment?

Answer 1

When they state root method, it looks like you will be using the 4th root as you solve for r.

 

A. Set S = 10,368

10,368 = 5000(1+r)^4

isolate the (1+r)^4 by dividing both sides by 5000

1296/625 = (1+r)^4

now, take the fourth root of each side of the equation. 

1.2=1+r

i suspect from there you can find r. Remember, r should be represented as a percentage!

 

B. since S is your future value which is the same as the present value + interest, S = 5000+2320.50 = 7320.50

follow the same process as step A to obtain your answer.