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Mr. Madoff invests 1000 dollars in a fund that compounds annually at a constant interest rate. After three years, his investment has grown to 1225 dollars. What is the annual interest rate? (Round your answer to the nearest integer.)

 

Thanks!

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2+0 Answers

 #1
avatar+79894 
+1

 

1225 = 1000 (1 + r)^3     divide both sides by 1000

 

1.225  = (1 + r)^3          take the cube root of each side

 

∛ 1.225   =  1  + r        subtract 1 from both sides

 

∛1.225  - 1   =  r   ≈    0.07  =  7 %

 

 

cool cool cool

CPhill  Dec 3, 2017
 #2
avatar+277 
+1

Thanks!
 


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