If an Amount of Money, Called the Principal, P, Is $A = P ( 1 + r ) ^ { 2 }$

question 422

Multiple Choice

If an amount of money, called the principal, P, is deposited into an account that earns interest at a rate r, compounded annually, then in two years that investment will grow to an amount A, given by the formula $A = P ( 1 + r ) ^ { 2 }$ If a principal amount of $5500 grows to $6415.20 in two years, what is the interest rate?

• A) 6%
• B) 10%
• C) 9%
• D) 8%

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