1. John lends his friend, Jake, $2000. Jake says that he will repay the loan in 2 years, with interest and asks John what interest rate is acceptable. If John wants $2600 at the end of 2 years, what interest rate should he tell Jake (assume annual compounding)?

Question

1.	John lends his friend, Jake, $2000.  Jake says that he will repay the loan in 2 years, with interest and asks John what interest rate is acceptable.  If John wants $2600 at the end of 2 years, what interest rate should he tell Jake (assume annual compounding)?

anonymous · Answer

2600=2000x^2

anonymous · Answer

what is x?

anonymous · Answer

you should get an answer of 1.something  The something will be the percent interest

anonymous · Answer

can you solve for x or do you need help with that

anonymous · Answer

i can figure it out if you tell me steps on how to find x

anonymous · Answer

like 5% interest for n years would be. =2000(1.05)^n

anonymous · Answer

divide both sides by 2000 to get x by itself

anonymous · Answer

x^2 by itself

anonymous · Answer

oh ok, so its to the 2nd power because he wants it paid off in 2 years

anonymous · Answer

then take the square root of both sides to find x

anonymous · Answer

subtract one to get a decimal and multiply 100 to get the percent interest

anonymous · Answer

right

anonymous · Answer

so the decimal is .5?