The square root property

Question

Use the compound interest formula A = P(1+r)^t to find the annual interest rate, r, if in 2 years an investment of $6000 grows to $8,640. What is the percentage rate?

Answer 1

A = P(1 + r)^t

8640 = 6000(1 + r)^2

(1 + r)^2 = 1.44

1 + r = 1.2

r = .2

The annual interest rate is 20%.