Find rate if $2000 comp. annually grows to $2400 in 2 yrs

[klubbhead024]

1. Find the interest rate if $2000 compounded annually grows to $2400 in 2 years.

2. How long will it take a $1200 investment to earn $200 interest if it is invested at 9% compounded quarterly?

I have the formula and the answers for these, but I can't seem to set it up right

 

[tkhunny]

That is a very odd thing. If you have the "formula", how can you not set it up right? The formula IS the setup.

I'll do the first one. You show me the second.

2000(1+i)^2 = 2400

(1+i)^2 = 2400/2000 = 1.2

Since we know 1+i is positive...

1+i = sqrt(1.2) = 1.095445115

i = 0.095445115 = 9.5445115%

If all you lack is the algebra, you had better go do some reviewing.

 

[stapel]

I have the formula and the answers for these, but I can't seem to set it up right

We can try to help you find any errors, but you'll need to show us the formula you're using and how you did the plug-n-chug.

Thank you.

Eliz.

 

[klubbhead024]

2. How long will it take a $1200 investment to earn $200 interest if it is invested at 9% compounded quarterly?

Ok.. I got

1200=(1+.09/4)^4t

This does not come out to the correct answer

 

[tkhunny]

1200=(1+.09/4)^4t

1400 = 1200*(1 + .09/4)^(4t)

Read the problem staement VERY CAREFULLY. No guessing. Is it a Present or Discounted Value? Is it a Future or Accumulated Value? Is it Interest Earned or Paid? What, exactly, are you given?

Write out the formula and fill in the blanks. Don't try to do it in your head.