I need a formula please! Here is the question:
you invest $2200 at an interest rate that is compounded annually. After 8 years, the principal amount has increased to $2896.98. What percent is the interest rate?

Question

I need a formula please!  Here is the question:
you invest $2200 at an interest rate that is compounded annually. After 8 years, the principal amount has increased to $2896.98.  What percent is the interest rate?

anonymous · Answer

i can calculate compound interest WITH a rate, but not sure how to do it backwards!  Help!

amistre64 · Answer

A = P (1+r)^t

A/P = (1+r)^t

t.rt(A/P) = 1+r

t.rt(A/P) -1 = r  maybe?

amistre64 · Answer

8rt(2896.98/2200) - 1 might do it

amistre64 · Answer

3.5% if soo

amistre64 · Answer

if 2200 (1.035)^8 = the larger amount were good

anonymous · Answer

Again a bit of confusion - one more question!!

amistre64 · Answer

http://www.wolframalpha.com/input/?i=+2200+%281.035%29^8+

amistre64 · Answer

its good

anonymous · Answer

OK - that's what I was confused about...the 8 is the exponent to the 1.035, correct?

amistre64 · Answer

yes

amistre64 · Answer

since its compounded 1 a year, there is no reason to do anything fancier

anonymous · Answer

Thanks!  That makes way more sense!

amistre64 · Answer

A = P (1+r)^t

A/P = (1+r)^t

ln(A/P) = t ln(1+r)

yeah, the only way i see to get to the r is to take the "t"root of it all