Solve the Problem $\mathrm { P }$ , Is Deposited into an Account That Earns Interest at Principal

question 193

Multiple Choice

Solve the problem.
-If an amount of money, called the principal, $\mathrm { P }$ , 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 $\$ 7147.80$ in two years, what is the interest rate?

• A) \(16 \%\)
• B) \(14 \%\)
• C) \(12 \%\)
• D) \(15 \%\)

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