The amount A in an account earning r percent (in decimal form) compounded annually for two years is given by $A = P ( 1 + r ) ^ { 2 }$ where P is the original investment. What is the interest rate r , as a percent, if the amount in the account is $235.44 and the original investment was $208 ? Round your answer to two decimal places.

A) 5.89 %
B) 6.89 %
C) 6.39 %
D) 5.39 %
E) 7.39 %

Question

The amount A in an account earning r percent (in decimal form) compounded annually for two years is given by

A = P ( 1 + r ) ^ { 2 }

where P is the original investment. What is the interest rate r , as a percent, if the amount in the account is $235.44 and the original investment was $208 ? Round your answer to two decimal places.

A) 5.89 %
B) 6.89 %
C) 6.39 %
D) 5.39 %
E) 7.39 %

Dees Uploads · Accepted Answer

Final Answer : C, Explanation :  First, we need to solve for the interest rate, r:  $235.44 = $208(1+r)^2  Dividing both sides by $208:  1.13 = (1+r)^2  Taking the square root of both sides:  1.06 = 1+r  Subtracting 1 from both sides:  r = 0.06 = 6%  Therefore, the interest rate is 6%, which corresponds to answer choice C when rounded to two decimal places.

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