The amount A in an account earning r percent (in decimal form)compounded annually for two years is given by $A = P ( 1 + r ) ^ { 2 }$ where P is the original investment. What is the interest rate r , as a percent, if the amount in the account is $235.44 and the original investment was $208 ? Round your answer to two decimal places.
A) 5.89 %
B) 6.89 %
C) 6.39 %
D) 5.39 %
E) 7.39 %

Question

Quizplus · Accepted Answer

First, we need to solve for the interest rate, r:

$235.44 = $208(1+r)^2

Dividing both sides by $208:

1.13 = (1+r)^2

Taking the square root of both sides:

1.06 = 1+r

Subtracting 1 from both sides:

r = 0.06 = 6%

Therefore, the interest rate is 6%, which corresponds to answer choice C when rounded to two decimal places.

The Amount a in an Account Earning R Percent (In A=P(1+r)2A = P ( 1 + r ) ^ { 2 }A=P(1+r)2

The Amount a in an Account Earning R Percent (In $A = P ( 1 + r ) ^ { 2 }$