word problem

Question

The formula
A=P(1 + r)²
gives the amount A in dollars that P dollars will grow to in 2 years at interest rate r 
(where r is given as a decimal),
using compound interest. What interest rate will cause
$ 2000 to grow to $ 2205.00 in 2? years?

Answer 1

Hi Amy

 

2205 = 2000(1+r)²

1.1025 = (1+r)²

1.05 = 1+r

.05 = r

r = 5%