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 $ 5000 to grow to $ 5304.50 in 2 years?
P=presne amount=5000 A=furutre amount which you want to be 5304.50
solve for r
5304.50=5000(1+r)^2 divide both sides by 5000 1.0609=(1+r)^2 sqrt both sides (remember to get positive and negative roots) +/-1.03=1+r minus 1 both sides +/-1.03-1=r
+1.03-1=r=0.03=3% -1.03-1=r=-2.03=false, no negative percents
