Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.3 Simple Interest - Exercise Set 8.3: 18

Answer

$20.3\% = r$

Work Step by Step

RECALL: The formula for the future value $A$ is: $A=P(1+rt)$ where P= principal amount borrowed r = interest rate per year t = time in years Use the formula above, with $A=\$14060$, $P=\$10000$, and $t=2$, to obtain: $\$14060 = \$10000(1+r \cdot 2) \\\$14060 = \$10000(1+2r)$ Divide $\$10000$ on both sides of the equation to obtain: $\frac{14060}{10000} = 1+2r \\1.406 = 1+2r$ Subtract $1$ on both sides of the equation to obtain: $0.406 = 2r \\\frac{0.406}{2}=r \\0.203=r$ Convert to percent to obtain: $20.3\% = r$
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